By Susan Rush
Wednesday, February 28, 2007
Looking to preserve shareholder value, UTStarcom announced plans to study its strategic options. The wireless equipment company has contracted Merrill Lynch to assist in the process.
Strategic alternatives may include an outright sale, partnerships or the release of units, although the company says there can be no assurances that a deal of any kind with come to fruition.
"Our Board of Directors and management team believe that the inherent value of the company and its opportunities are not reflected in our current share price," said Hong Lu, chairman and CEO of UTStarcom, in a prepared statement. "We believe the engagement of Merrill Lynch will help us to carefully examine a range of short and long-term alternatives," he said.
Ying Wu, CEO of UTStarcom China, who was slated to take up the post of global CEO in January, has instead agreed to oversee this effort, under the direction of the special committee. Wu will, however, continue his current management responsibilities while he is working with the special committee.
On the heels of UTStarcom's announcement, analyst firm Bear Stearns upgraded the company's rating to "peer perform" from "underperform."