A few years ago, communications equipment and wireless-broadband company UTStarcom, Inc. (Nasdaq:UTSI) was a rising star. Largely driven by its leading market share in China, where breakneck economic growth, soaring consumer demand and the Chinese government's commitment to speed up technology infrastructure helped the company annually double its sales and profits. But, alas, no more. A cycle of turmoil, including steady financial woes and management discord, dragged the company into the red in 2005 and it has stayed there until recently, with signs pointing to it bouncing back into the black.

Founded in 1991 and headquartered in Alameda, Calif., UTStarcom provides communications equipment, networking solutions and international service and support to telecommunication service providers that operate wireless and wireline networks. With R&D operations in the United States, Canada, China, India and South Korea, the company sells its broadband, wireless and handset solutions to operators in both emerging and established telecommunications markets around the world. The company has had most of its successes in China and India, where it controls 65% and 80% of mobility markets, respectively.

Of the five company segments, which include broadband infrastructure, multimedia communications, handsets and services, UTStarcom's broadband business appears the most promising. IPTV, or Internet protocol TV, a technology that allows computer users to watch streaming TV channels over the Internet, is burgeoning in China, Japan and India, three key places where UTStarcom does business. The company, which dominates the small but fast-growing Chinese IPTV market with 90% market share, expects to have some 20 million paying IPTV subscribers by 2010. It helps that UTStarcom has solid relationships with domestic carriers and content providers such as Shanghai Media Group, the second-largest media group in China that also works closely with Intel Corporation (Nasdaq:INTC).

Last week, UTStarcom announced it will help set up an interactive advertising system in China for Guangxi Telecom Co., a firm owned by Beijing-based China Telecom Corp. (NYSE:CHA). While the company didn't release the terms of the deal, it did say Guangxi Telecom will use UTStarcom's IPTV equipment in the new advertising network, which will reach 14 Chinese cities through set-top boxes in office buildings, department stores, supermarkets and other locations.

But China is not the only place UTStarcom has been making moves. The company, which brought the first IPTV service to India and expects to become the largest provider of broadband online TV technology equipment in the country, signed a second contract with India's Aksh Optifibre. Tapped in early 2007 to deliver commercial IPTV service in Delhi through Mahanagar Telephone Nigam (NYSE:MTE), the new contract will allow UTStarcom to assist Aksh in extending its reach by delivering IPTV services to Mahanagar subscribers in Mumbai. And it was recently chosen to head up the launch of IPTV Sri Lanka. Through a deal inked with Just In Time Holdings Pvt Ltd., UTStarcom will supply its RollingStream end-to-end IPTV solution to Sri Lanka Telecom Public Ltd. Co., the country's largest tier-one wireline and incumbent operator.

Earlier this month, UTStarcom announced it was selling off the cellular handset distribution company that it purchased from Audiovox (Nasdaq:VOXX) almost four years ago to an investment group that includes current managers of what was UTStarcom's personal communications division and AIG Vantage Capital, which is controlled by AIG Investments. AIG will become a controlling shareholder of the new entity while UTStarcom will hold on to a 2% stake in the business. The deal will net UTStarcom $240 million and up to $50 million in performance payouts over the next three years.
 
Despite the recent strides, pundits remain cautious on UTStarcom. Of the four analysts who track the stock only one, Hamed Khorsand of BWS Financial has a "buy" rating. BWS did not change their $6 price target outlook and acknowledged that the windfall will allow UTStarcom to infuse its core business segments with vital capital to expand its international sales presence and keep some cash on hand during lean times. Jeffries & Company, which was not impressed with the handset unit divestiture, expects the company's operating losses to continue until the fourth quarter of 2009, since it will take time for the growing IPTV business to translate into revenues.

It is expected that China's communication market will show extremely strong growth over the next several years. And though ITStarcom may be a way to play the Chinese telecom boom, it appears to be a longer-term proposition since the company faces serious challenges, such as diversification, given declining handset sales account for half of its business. As far as the prospect of being gobbled up by a multinational player, UTStarcom will first have to overcome the obstacles it faces before any potential suitors make a play for the company.

Everything considered, only time will tell if this one-time shooting star will regain its brilliance.

The stock, which has a 52-week trading range $2.23 to $5.94, closed at $4.99 on Wednesday.