What's up with UTStarcom/China?
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JAFCO Investment (Asia Pacific) is targeting a $200 million fund, and Walden International, which has offices in both Palo Alto and San Francisco, wants to raise between $350 and $400 million. Both funds are to be raised in part or full by the end of the year, according to VentureWire (subscription required).
But we can't help noticing the continued problems that local Bay Area company UTStarcom (of Alameda) is having in China. UTStarcom is the biggest supplier of wireless-telephone systems there, but it reported a massive third-quarter loss of $402.7 million. It is writing off assets, and sure, has some of its own...
particular problems, but it is apparently trying to cut its dependence on wireless products in China, where revenue is actually falling (free registration), and increase sales of devices like television-based Internet access in other countries. LightReading has a blurb, as does TelephonyOnline -- though neither gives much detail.
http://www.siliconbeat.com/cgi-bin/mt331/mt-tb.cgi/858
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The problem with UTStarcom is that their chief wireless product is not a cell-phone but a PAS phone, which is a low cost alternative that only works for reception and phone calls within a city's limits. For a while this looked promising, but the Chinese consumers are rapidly outgrowing this low-level technology, and want full fledged mobile with all of the advantages that it offers. UTStarcom doesn't really have any strengths in this area, so is in a declining low-margin business.
The Stalwart on November 9, 2005 7:35 AMComment link
