The Pomerantz Firm Charges UTStarcom, Inc. with Securities Fraud -- UTSI


NEW YORK, Dec. 3, 2004 (PRIMEZONE) -- Pomerantz Haudek Block Grossman & Gross LLP (www.pomerantzlaw.com) has filed a class action lawsuit against UTStarcom, Inc. ("UTStarcom" or the "Company") (Nasdaq:UTSI) and eight of the Company's senior executive officers and/or directors, on behalf of all persons or entities who purchased the securities of UTStarcom during the period from April 16, 2003 to September 20, 2004, inclusive (the "Class Period"). The case, Civil Action Number 04 4991 in the United States District Court, Northern District of California, has been assigned to Judge Charles R. Bryer.

UTStarcom designs, manufactures and sells telecommunications equipment, and provides services associated with their operation. The complaint alleges that during the class period, defendants violated the federal and securities laws by disseminating materially false and misleading statements concerning the Company's results and operations. The complaint charges that defendants grossly inflated projections for the fiscal years 2004 and 2005, thereby causing UTStarcom's shares to trade at artificially inflated levels. The true facts, which were known to each of the defendants but concealed from the investing public, were that UTStarcom had massive supply chain constraints delaying legitimate revenue recognition, its prime margins were eroding in China, and its Japanese-related revenue projections were overstated by $290 million. Defendants also concealed that the Company lacked internal control over its ability to analyze revenue recognizing criteria and was in violation of Nasdaq rules requiring that the Board of Directors have a majority which is independent.

On April 16, 2003, the first day of the class period, UTStarcom issued a press release, titled "UTStarcom Q1 2003 Earnings Results: Best Quarter in Company's History." In the release, the Company reported "record revenues and earnings," including an increase in net sales of 80% over the same period in the prior year, and a 113% increase year-over-year in net income. Throughout the class period, the Company issued a series of press releases, continuing to assert its financial good health.

On September 16, 2004, UTStarcom filed its second quarter Form 10-Q with the SEC, in which it stated, among other things, that a Company-initiated review of a deal with Japan Telecom "led management to conclude that certain significant control deficiencies exist related to the review and evaluation of criteria related to revenue recognition, including process deficiencies with respect to obtaining evidence of delivery" and that "certain inventory transactions recorded in the quarter ended June 30, 2004 were in error." News of significant problems with the Company's internal controls caused UTStarcom shares to drop 5.86% the next day, September 17, 2004. On September 20, 2004, the last day of the class period, a UTStarcom press release announced that the Company was revising its financial guidance downward for third-quarter and full-year 2004. News that the entire $290 million in revenue from the Japan Telecom deal was not eligible for recognition in 2004 shocked investors and caused UTStarcom shares to drop $1.50, or 9.86%, in one day on very heavy volume, to close at $13.70 on September 20, 2004.

If you purchased the securities of UTStarcom during the class period, you have until January 14, 2005 to ask the Court to appoint you as one of the lead plaintiffs for the Class. In order to serve as lead plaintiff, you must meet certain legal requirements. Shareholders outside the United States may also join the action, regardless of where they live or which exchange was used to purchase the securities. If you wish to review a copy of the Complaint, to discuss this action, or have any questions, please contact Carolyn S. Moskowitz (csmoskowitz@pomlaw.com) or Teresa Webb (tlwebb@pomlaw.com) of the Pomerantz Firm at 888.476.6529 (or 888.4-POMLAW), toll free. Those who inquire by e-mail are encouraged to include their mailing address and telephone number.

The Pomerantz Firm, which has offices in New York, Chicago and Washington, D.C., is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 50 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members.

More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.



            

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