Shares of UTStarcom Inc. tumbled more than 25 percent after the company announced a series of warnings, including a drop in revenues, a Securities and Exchange Commission investigation and a potential writedown of its assets. The company’s stock dropped from $7.65 per share to $5.65 per share after the announcement.
“Although we are still going through the quarter-end close process, we wanted to make this announcement as early as possible,” said Fran Barton, the company’s executive vice president and chief financial officer. “Despite the revenue and margin shortfalls, we are pleased with the strong cash flow from operations in the third quarter as cash collections were better than anticipated.”
UTStarcom said it would post revenues of between $620 million and $640 million in its third quarter, down from its previously expected $660 million to $680 million. The company said the drop was due to sales of its TV products.
UTStarcom separately announced it is evaluating its assets and other properties, and could “write-off some of the book value of these assets.”
Finally, the company said it “received notice of a formal inquiry by the staff of the Securities and Exchange Commission into certain aspects of the company’s financial disclosures during prior reporting periods.” The company did not offer further details.
