UTStarcom Pins Growth On New Products, New Territories

Las Vegas — UTStarcom's personal communications division expects an approximate 15 percent increase in 2006 handset sales to about 8.5 million units, driven in part by a dramatic increase in its GSM-phone selection, an international expansion into Europe and Asia, and greater market share in North and South America, division president Philip Christopher said here during the CTIA convention.

Among 20 new products developed to boost 2006 sales, the company will offer its first Wi-Fi/GSM phone, a thin 9mm-deep CDMA 1x phone, and possibly a low-tier GSM/CDMA 1x EV-DO phone, which is the first such phone announced in the industry, he said.

Christopher also expects continued profitability gains in 2006, marking the third consecutive year of profitability following a break-even 2003 and money-losing 2001 and 2002. Profits will grow because of a wider selection of niche-market phones and new phones made for the division by parent UTStarcom, Christopher said. Internally made phones yield a higher margin than outsourced models, though that's partially offset by higher R&D costs, he said.

Christopher projects that 20 percent of the division's 2006 unit sales will come from UTStarcom-made phones.

The first two UTStarcom-made phones for the U.S. market were on display, one of which has already been approved for use on the Sprint network, Christopher said.

The division's 2006 margin target, including internally made and outsourced products, is in the high teens, Christopher said. He also noted that the company can make money on 5 percent to 6 percent margins.

The division, formerly Audiovox Communications, became part of UTStarcom on Nov. 1, 2004.

As part of its sales strategy, the division hopes to expand its GSM selection worldwide from a current two models to 10 platforms, plus variations, Christopher said. The company also plans to offer 10 CDMA platforms, plus variations.

The division's GSM selection accounts for 10 percent of unit sales and consists of two models: the T-Mobile SideKick and a low-tier GSM phones.

The first two U.S.-market CDMA phones designed and manufactured by UTStarcom are CDM7025 and CDM7075, both displayed at the convention. The 3.2-ounce 7025 is a low-tier product that is the first-ever low-tier China-made handset to be approved by Sprint, said Christopher, who also expects the phone to be carried by other U.S. carriers.

The planned 9mm-thick candybar phone, expected to be available in August, will be a dual-band 800/1,900MHz CDMA 1x model.

The hybrid GSM/CDMA 1x EV-DO phone is in carrier testing and will probably be available in the third quarter, he added.

The low-tier EV-DO phones that will be manufacturerd by parent UTStarcom is targeted for fourth-quarter availability, but that will depend on carriers' approval processes, Christopher said.

In other products, the division displayed a water-resistant phone and said it is developing an EV-DO Rev. A modem card for end-of-year availability and that a W-CDMA card and W-CDMA phone might also be out by the end of the year, depending on carrier commitments.

In expanding outside the Americas, the division said it has already begun selling into India and Bangladesh and will return to the European market after an absence of a number of years.