UTStarcom Holdings Corp Investor Presentation. NASDAQ: UTSI March 2016

Transcription

1 UTStarcom Holdings Corp Investor Presentation NASDAQ: UTSI March

2 Disclosure & Forward Looking Statements This investor presentation contains forward-looking statements, including statements regarding the Company's expectation regarding its strategic initiatives and business outlook. Forward-looking statements are based on current expectations, estimates, forecasts and projections about the Company, the Company s future performance and the industries in which the Company operates as well as on the Company management's assumptions and beliefs. These forward-looking statements are only predictions and are subject to risks and uncertainties that may cause actual results to differ materially and adversely from the Company s current expectations. These include risks and uncertainties related to, among other things, changes in the financial condition and cash position of the Company, changes in the composition of the Company s management and their effect on the Company, the Company s ability to realize anticipated results of operational improvements and benefits of the divestiture transaction, successfully operate and grow its services business, execute its business plan and manage regulatory matters, as well as the risk factors identified in the Company s latest Annual Report on Form 20-F, and Current Reports on Form 6-K, as filed with the Securities and Exchange Commission. We undertake no obligation to update these forward-looking statements to reflect events or circumstances occurring after the date of this investor presentation. The Company is in a period of significant transition and the conduct of its business is exposed to additional risks as a result. 2

3 Investment Highlights Leading Technologies in Packet Optical Transport and SDN Innovative and customized solutions that help operators to reduce opex/capex and quickly launch new services Long-term partnerships with global blue-chip carrier customers Best-in-class product quality attributable to proven R&D and in-house manufacturing capabilities New growth market opportunities in Residential Gateway, Data Center, and Smart City 3

4 Overview of Key Products 100G Packet Optical Transport Global spending on Carrier Ethernet Switches: In 2013: $2.9B. By 2018: $3.7B (projected) Worldwide carrier router and switch market to grow at ~2% CAGR from 2014 to 2019 Revolutionary SDN Platform Global spending on SDN: In 2013: $1.5B. By 2018: $35.6B (projected) Global carrier SDN and NFV hardware and software to grow from less than $500 million in 2013 to over $11 billion in 2018 Virtual Broadband Gateway A new disruptive technology to compete on Residential and Enterprise Gateway markets. Global Residential Gateway market is forecasted to grow at a CAGR of ~7.8% over the period Residential networking devices market size in 2014 ~$13.4B Nearly 20,000 nodes have been deployed. Flagship 100G TN765 field deployed in New NG-PTN product line announced in 2015: higher efficiency and advanced SDN-based features. Rich SDN functionality including L3VPN and uflex BoD. Layer3 VPN solution with SDN/NFV enabling Provisioning of pre-planned bandwidth on demand: uflex BoD At the forefront of SDN development: SOO SDN controller launched in 2014 and POC completed in A technology that brings intelligence to customer s edge: service flexibility, high data rates and improved quality of experience. North America a primary target market. Good potential to become an integral part of Smart City infrastructure. Data Center Switch A swiftly growing market: Data Center Ethernet Switch market growth at 16.27% CAGR (2013 to 2018). The data center switch market is forecasted to approach $16 billion by Sources: Infonetics, SDNCentral, Plexxi,, TechNavio, Crehan Research Inc. and Lightspeed Venture Partners Potential need for large volumes of DC Switches thanks to wide adoption and deployment of Data Centers worldwide. UT s SDN/NFV brings benefit of end-to-end service orchestration from customer to DC port. 4

5 Product Portfolio SDN product Line: SOO (Software Defined Open Packet Optical) Network SOO Station: SDN Sub/Central Controller SOO Store/Design/Care: SDN Apps Automation, BoD, Centralized L3 SIMPLE NETWORK, SIMPLE OPERATION SDN & Network Management Centralized network and element management solution Advanced GUI-based network management with end-to-end service provisioning High scalability and reliability Open Platform: Packet Optical Transport Packet Optical Transport Network MPLS-TP & CE Complete product family from Metro Access and Aggregation to Core Network Large scale deployments for Tier 1 telecom operators Open Southbound I/F managing 3rd party systems Open Northbound CORBA I/F and API for integration Broadband Access Wireless BB access solution Complete Carrier-class Wi-Fi solution: AP & AC, AAA, Billing, Policy, QoS, Portal etc. Mobile data offloading Fixed-line BB access solutions MSAN, EAD and FTTx PON Over 40M access lines deployed Services Professional services: planning, deployment, maintenance, technical support, project management etc. Large-scale deployments for IP-DSLAM, MSTP, MSAN, PON & Packet Optical systems and networks 5

6 GE/10GE Ecosystem 10GE/100GE Ecosystem Packet Optical Transport Products Portfolio NG-PTN 9U 100G SDN/NFV SOO Network 1U 2U L2/3 L2/3 L2/3 L2/3 TN701B 10Gbps SW GE SFP/RJ45 Indoor/Outdoor TN703A 64Gbps SW GE/XGE E1/STM-1 TN704A 136bps SW GE/XGE E1/STM-1 TN Gbps SW 1/10/100GE 10G POS PTN 18U 7U 7U 1U 1U 3U TN701A 4.4Gbps SW GE SFP/FE RJ45 Indoor/Outdoor TN703C 6.4Gbps SW FE/GE/E1 Indoor/Outdoor TN703E 44Gbps SW FE/GE/XGE E1/STM-1 TN705 88Gbps SW 2.5/10G POS FE/GE/XGE E1/STM-1 TN Gbps SW 2.5/10G POS FE/GE/XGE E1/STM-1 TN725E 176Gbps SW FE/GE/XGE E1/STM-1 TN Gbps SW 10GE/10G POS FE/GE E1/STM-1 Netman OMC-O NMS CPE Access * Development. Specs are subject to change Aggregation Core Network Intelligence 6

7 SOO Platform Transport SDN SDN Product Line: SOO(Software Defined Open Packet Optical ) Network 3 rd Party Apps SOO APP : In-house/3 rd party applications - In house apps for customer/manager service ordering, network design etc. - Open & standard interface for 3 rd party s APPs integration SOO Station : SDN Controller - Centralized SDN Controller - Open APIs for vertical integration of applications - End-to-end automated service provisioning - Path computing and management - Advanced services including Bandwidth on Demand, L3VPN SOO Device : SDN-ized Network Devices - Controlled by SOO Station - NetRing series PTN products 7

8 Outstanding Manufacturing & Quality Assurance Capabilities Over 20 years manufacturing experience Focus on telecom equipment Comprehensive manufacturing capabilities: From PCB Assembly To MEC Assembly To System Integration From NPI (New Products Introduction) To MP( Mass Production) SMT, THT (PTH), MEC Assembly, Micro BGA, CSP,0201 BGA Rework and Re-Balling The highest quality standards, comprehensive quality control Comprehensive quality control process, certified by LRQA for ISO9001/14001, OHSAS 18001,QC Quality centric culture, implement Kaizen supervised by Japan customer and partner Field proven, hardware failure rate less than 0.05% per month Green, environment friendly, employee care Apr-05 May Jun-05 Jul-05 Aug-05 Sep Oct-05 Nov Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 CISCO 故 障 件 数 UTS 故 障 件 数 CISCO 故 障 率 UTS 故 障 率

9 Multiple Tier-1 Carrier Customers Japan Softbank NEC India around 35% broadband market share BNSL Bharti Korea Key Partner Dasan Networks Latvia LMT Taiwan Taiwan Chunghwa Telecom Southeast Asia Telkomsel, Indonesia Banglalion, Bangladesh Brazil Oi USA In pursuit of US residential gateway market 9

10 Virtual Gateway Labs (VGL) Overview Founded in 2015, VGL develops next generation products that allow seamless access and aggregation at the edge of the network. Products VGL offers broadband gateway products that implement the next generation deployment model by which the communication provider and the municipality would be deploying a base service network to provide bandwidth and emergency supports. Additional services such as TV programming, home monitoring, etc., will be deployed and can be offered by a third party vendor without being handled by the offering carrier, which typically aims at 3rd tier to some 2nd tier local and regional carriers. Home gateway deployment: a simple Active Ethernet outdoor-mountable gateway with SFP-based 1G optical Ethernet uplink with 4 x 10/100 RJ-45 down links. The unit also supports 2xVoIP FXS ports for land line home phones. The gateway is powered by a battery backup pack and a 12V DC power source. Market Opportunity VGL s platform will help fuel tomorrow s open access network when broadband will be more than just the Internet, and offering a new variety of virtual services including: Emergency communications Interactive entertainment Home automation Smart grid Connected sensor systems 10

11 Data Center Market Opportunities Impact as related to UT business Potential need for large volumes of DC Switches UT s SDN/NFV can bring many benefits: Integration of DC and Telecom infrastructure for efficient end-to-end service orchestration Integration with DC for efficient implementation of network functions: Firewall, DPI, VPN, Routing, Load balancing etc. Asia/Pacific is expected to have the largest NFV and SDN market growth between now and

12 Smart City Market Opportunities Smart City ICT vital enabling element of the Smart City concept Requires 100% broadband penetration both fixed line and wireless Assumes convergence of Telecom and IT infrastructure: Internet access Broadband services Telecom services Data services Cloud services Security, VPN, Firewall Big data analytics IoT, M2M 100% broadband Penetration 100% wireless coverage (4/5G, Wi-Fi) More traffic IoT, M2M IPv6 Impact as related to UT business Wide use of data centers SDN Network Municipal Management system (MMS) Growing need for NG-PTN metro network Need for large volumes of DC Switches SDN Experiences can bring many benefits High availability and scalability NMS 12

13 Non-GAAP Financial Overview Revenue in $M Gross Margin Percentage % 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 14.3% 20.1% 24.0% 11.9% 14.9% 16.2% 22.8% 30.6% Q Q Q Q Q Q Q Q4 0.0% 2014 Q Q Q Q Q Q Q Q4 Operating Expenses in $M Operating Income in $M Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q4 UTStarcom Confidential 13 13

14 Outlook We have strategically realigned our business in order to transform the company, generate higher margins, and ultimately enhance shareholder value. Looking at the first quarter of 2016, the Company expects to generate non-gaap revenue in the range of $15-$20 million

15 Investor Relations Contacts For investor and media inquiries, please contact: UTStarcom Holdings Corp. Tel: Fei Wang, Deputy Director, FP&A and IR Ning Jiang, Investor Relations John Evans, Petrus IR 15