Audiovox Corp. To Exit Cellular

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Hauppauge, N.Y. — Audiovox Corp. will leave the cellular handset market in the fourth quarter, when it expects to close the $165.1 million sale of its cellular subsidiary to handset and infrastructure supplier UTStarcom.

Under a licensing agreement, however, the Audiovox brand name will live on in the cellular industry for at least five years. Audiovox was one of the first companies to enter the U.S. cellular handset business when it entered the market in 1984.

"We have decided to exit that business because we believe we no longer have the capabilities to be a major player in that market," said Audiovox Corp.’s chairman and CEO John Shalam. For its part, wireless-infrastructure maker UTStarcom said the acquisition will be a benefit because it will become a full-line supplier to carriers. UTStarcom also said it would increase Audiovox-handset gross margins because it already designs and manufactures its own handsets in China. The company claims it is China’s largest handset supplier.

Earlier this year, Audiovox Corp. signed a non-binding letter of intent to sell a majority stake in its majority-owned Audiovox Communications subsidiary to South Korean handset supplier Curitel after Curitel made an unsolicited bid for the company. Curitel is one of Audiovox’s handset suppliers.

At the time, however, Audiovox said it would entertain other proposals before signing a definitive agreement with Curitel.

Based in Hauppauge, N.Y., publicly traded Audiovox is the offspring of a company founded in 1960 by current president and CEO John Shalam to sell car radios to new-car dealers. Shalam adopted the Audiovox name in 1965, and his company went on to become a dominant marketer of car radios and stereos sold through car dealers. The company also rode the CB (citizen’s band) radio craze in the 1960s and 1970s and then diversified in the early 1980s into aftermarket car security systems.

The diversification move that would most profoundly influence Audiovox’s destiny was the launch of the company’s first cellular phones in 1984, less than a year after cellular service came to the U.S.

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