- Jefferies comments on UT Starcom (NASDAQ:UTSI) saying their believe risks outweigh potential returns. N-T risks include mgmt departures, slowing PAS mkt, ongoing restructuring, and continuing losses. UTStarcom is seeking strategic alternatives, which could result in asset disposals rather than a sale of the entire company. The firm has shifted to a sum-of-the-parts valuation, with a $10 price target.
Firm notes they see divestiture of businesses as the most likely alternative. In their view, UT Starcom acquired its way into too many disparate businesses as it tried to diversify away from a declining PAS market. Firm says they have a tough time identifying a potential buyer for the entire company. On the other hand, a divestiture of individual businesses won't be an easy task either. Individual businesses could be difficult to unwind and separate from the core R&D and manufacturing assets of the company.
They have segmented UTStarcom's business into five components (slightly different from reported segments). This totals a value of roughly $1.2 billion, or 0.6x 2006 rev est. The calculation includes $360M for its PAS businesses, $400M for CDMA handsets, $320M for Broadband Infrastructure, $120M for Wireless Infrastructure.
Maintains Hold.
Notablecalls: It must be a pain covering a co like this one. There looks to be very little hope for the holders of the common here. Lucky for them, short interest stands close to 20%. Not actionable but good to know category.
Firm notes they see divestiture of businesses as the most likely alternative. In their view, UT Starcom acquired its way into too many disparate businesses as it tried to diversify away from a declining PAS market. Firm says they have a tough time identifying a potential buyer for the entire company. On the other hand, a divestiture of individual businesses won't be an easy task either. Individual businesses could be difficult to unwind and separate from the core R&D and manufacturing assets of the company.
They have segmented UTStarcom's business into five components (slightly different from reported segments). This totals a value of roughly $1.2 billion, or 0.6x 2006 rev est. The calculation includes $360M for its PAS businesses, $400M for CDMA handsets, $320M for Broadband Infrastructure, $120M for Wireless Infrastructure.
Maintains Hold.
Notablecalls: It must be a pain covering a co like this one. There looks to be very little hope for the holders of the common here. Lucky for them, short interest stands close to 20%. Not actionable but good to know category.
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