That was painful to go through. Warranty reserves, write downs on investments ($16m)(one holding went BK), $32 loss in an India contract, PCD inventory writedowns. Throw in the stock investigation/no filings, the collapse in PAS, very high OPEX, slowdown in IPTV early this year, low PCD margins (their largest rev generator). How the fu#@^k did they think somebody else will pay a premium ($10-15/share??) at that stage. And after all of that, their cash flow was $66 million and net cash gain was $12 million. (Inventory went down so...) Operationally, they lost $100+ million.

When "outsiders" look at UT, I really feel that they actually feel sorry for the company because of all the potential it had (and still has).

Now, the good news. The stock is less than $5 and everything I've said over the last 4 months basically refers to the LOW stock price and their assets. Please don't take this to mean it will be the next Apple or anything. All I'm saying is that its worth much MORE right now (how much more changes daily/quarterly because they may continue to fu#@%ck it up).

Ok, to the specifics. Barton was able to repatriate $150m and still had over $300m in China. That $450 is an INCREASE from $416m at the end of June. The $32 million "loss" in India was probably a sacrifice to get in good graces for getting the contracts we have heard about (2.8 million lines, IPTV wins, etc) that are all profitable contracts. The Q1/Q2 2007 is going to follow in 2 weeks and Q3 in early November. At least they will be current in the next month and no other investigation or surprises from that front. The $10-15 million quarterly OPEX reduction is still projected ($21 million yearly is only part of it-most through efficiencies, using less consultants, etc). PCD handsets (some models >20% from Lu) and internally designed hs margins are still targetted to make mid 10s GMs. This is critical if they are to make high to 10% GMs overall since the rest are resale. The still have the infinera/gemdale holdings (over $100m). Wonder why they don't sell this now.

Most updates will come in the Nov call but I'm sure they'll give some additional input in the late October call - this is fun isn't it (what else would we longs do if not for this soap opera).

The analysts asking questions today were basically stonewalled because most were interested in the future and can't get their estimates moving forward without company guidance.

Overall, a great situation painted asset wise etc if your cost basis is $5 or somewhere around there and haven't waited 3 years! Outside of that, you are once again reminded of the waste and inefficiencies and lost opportunities. Very frustrating as I am in the 2nd class of longs.

Going forward, you'll hear me defend the stock at these levels and its another year closer to iptv growth, earnings, finished filings etc. But if they had reported this on time, no way would they have gotten to $10-11, which has caused problems for a lot of holders that bought in the $7-11 range thinking it could be sold.

So, I don't give management a pass and continue to bash them but at the same time am not inclined to sell $10 for $5. Their businesses are still very lumpy from quarter to quarter but I just base my valuation on cash and assets.

Now, what does it mean short term? S&P didn't upgrade. I'm not surprise after not much info going forward was mentioned. This gives the shorts another month to squeeze retail longs but they may actually start covering in the next few weeks. Institutions may start nibbling but they may rather ride the moving horses right now. This is why its essential the market doesn't keep going up. The "value" plays with issues to resolve won't get much play when you can ride Google, Apple and others.

cont...