Sunday, April 5, 2009

Failure of Lu & Toy

ALAMEDA, Calif., May 10, 2006 — UTStarcom, Inc. (Nasdaq: UTSI), today announced that its Chairman and Chief Executive Officer, Hong Lu, notified the Board of Directors of his resignation. Mr. Lu will remain as Chairman and CEO of the company until December 31, 2006, focusing on the Company's strategic opportunities and assisting during the transition. Mr. Lu will remain as a strategic advisor to the company after his formal departure in December. Tom Toy, currently an independent director of UTStarcom, will assume the position of chairman of the board as of January 1, 2007.

"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.

- October 12, 2006

"After careful consideration of a number of short- and long-term alternatives, we have determined that our best course of action is to move forward with the company as it exists today," said Thomas Toy, chairman of UTStarcom's board of directors. "Our stated goal when we commenced the strategic alternatives process in October 2006 was to explore potential options to maximize the company's value for UTStarcom's shareholders. In exploring those alternatives, we concluded that the optimal means of enhancing shareholder value is to focus our efforts on returning the company to profitability by building on the opportunities we have developed in key markets around the world."

In addition, the company today announced the departure of Ying Wu, executive vice president and chief executive officer of UTStarcom China.

June 1, 2007

Soon after, Peter Blackmore was brought in to be the COO and promised the CEO position.

While there has been changes from management with Sophie, Barton, Huang, and Wu leaving, the constant presence has been Hong Lu and the BODs, led by Thomas Toy. In a monumental collapse such as in the case of UTStarcom, the leadership has to be accountable and from the very beginning, Lu/Toy have been in charge.

I do not know the exact details of the events and decisions made by the company privately but there can be no question that shareholder value has been destroyed and any other company would have asked both Lu/Toy to step down by now.

The current situation between the CEO Blackmore in the US, BOD chairman Lu in China and a new Chinese CEO (and the other Chinese executives in China) show that at best, the leadership question is cloudy and more likely a bad joke to the existing suffering shareholders. The company should immediately clear up the leadership situation as it shows waste at the best and lack of control by the current CEO (Blackmore). Again, I ask why should Lu/Toy having driven the company/share price to the ground still even be involved with the company.

The rest of the board is equally useless as the handling of the strategic study, leadership situation, compensation and the collapsed stock price show ($2m retention bonuses for Barton, etc..; 50% salary increase from $500k to $750k for a job well done when the company continued to bleed and the stock sliding).

Its time (way late actually) for shareholders to demand that Lu/Toy step down. Only then can the company truly enhance shareholder value. Lu/Toy have done way too much damage already and are not fit to run/lead this company.

Shareholders can ask for more information on this and that, hope for profitability at this or that date, dream of the potential returns and other scenarios but until Lu/Toy are removed, nothing will really change for the prospects of the company.

One final a country with the growth prospects and entrepreneurial skills in China, Lu/Toy are the barriers to getting people that can actually increase shareholder value. Long suffering shareholders can still hope and fight for real transformation of this company and it starts with getting rid of Lu/Toy.

Have a good weekend.