UTStarcom’s RollingStream IPTV solutions are acting as the main catalyst and at the end of March 2009; the RollingStream system supported more than 1.32 million IPTV subscribers worldwide with a total deployed subscriber capacity of 2.5 million. The company maintains a commanding market position in the Asian regions, especially in China and India.
 
Nationwide deployment of 3G wireless networks by Chinese telecom carriers has resulted in strong order bookings. Recently, China Telecom (CHA) announced plans to implement a large-scale Mobile TV system in China using UTStarcom’s RollingStream platform.

The company has also expanded into IPTV advertising systems to obtain new revenue opportunities along with emerging prospects at Chinese cable operators. In India, the state controlled BSNL and MTNL together with Bharati Airtel, India’s largest wireless service provider use RollingStream solutions. Sri Lanka Telecom also delivers IPTV services using UTStarcom’s technology.
 
UTStarcom is trying hard to get a commanding market share in the European and North and Latin American markets. Latin/Central American regions may become a new growth area for the company with huge untapped market potential.

However, competition will be very tight in all these markets. European and North/Latin American markets have so far been served by financially sound companies like Thomason SA (TMS), Microsoft (MSFT), Motorola (MOT), Cisco Systems (CSCO), Siemens AG (SI) and Tandberg.

We believe the company’s ongoing restructuring activities and a strategic decision to optimize its R&D spending by focusing on selected products may help the company to introduce competitive products in the near future. We maintain our Hold recommendation for UTStarcomm.

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Here are highlights from Thursday's Analyst Blog:

Consolidated Banking, Maybe?

Clearly the cobbled-together oversight from various federal agencies was ineffective to contain the current financial crisis that all but swallowed the U.S. last year -- institutions such as but not limited to Citigroup (C), Bank of America (BAC), JP Morgan Chase (JPM) and AIG (AIG) -- and it remains in fairly close proximity to do so again.

Several weeks ago, U.S. Treasury Secretary Timothy Geithner sent to Congress a proposal to potentially to overall the current supervision of financial markets. While much is still up in the air, it is now expected as early as mid-June 2009 that the Obama Administration will make a formal recommendation to Congress for the creation of a single banking regulator to oversee the entire sector. It would be hoped that if such a proposal were sent to Congress it woud be finalized by the end of the year to help resolve the current quagmire.

Currently, a disconnected grouping of state and federal regulators oversee financial institutions throughout the country. It is not anticipated that the Obama Administration will propose the elimination of this so-called "Dual Banking System."

The new regulator would serve as primary regulator for the nationally chartered banks and thrifts, serve as a secondary oversight for the more than 5,000 state-regulated banks and the primary regulator for the nationally chartered banks and thrifts, and help to streamline supervision of banks and make it harder for banks to game the system by shopping for the lightest form of oversight.

UTStarcom - Big Opportunities

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.

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