We expect UTStarcom, Inc. (UTSI), a provider of IP-based telecom equipments, to receive further demand for its IPTV solutions as mobile TV systems become increasingly popular in China and India due to nationwide deployments of 3G wireless networks.

UTStarcom’s transformation from a mobile handset developer to an IPTV and optical transport solutions provider has been favorably implemented.

Moreover, the company’s current valuation is below its net cash position. At the end of the first quarter, the company had approximately $2.41/diluted share of cash position with no outstanding debt.

On the other hand, the markets for IPTV solutions and intelligent switching products are highly competitive and this, together with global economic weakness, may hinder efforts to improve the company’s earnings power.

We do not expect UTStarcom to achieve profitability any time soon. While we maintain our Hold rating, due to higher risk levels, we forecast a higher valuation target over the six to twelve months.

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