UTStarcom reported an 87 % yearly decline in sales for Q2 at $ 80.2 million as compared to $ 633 million registered in Q2 2008. Gross margins for the company in the quarter were at negative 20%  as compared to 13 % in Q2 2008.

Operating loss widened during the quarter from $ 31.1 million to $ 85.4 million. The net loss too increased from $ 38.8 million ($0.31 per share) in Q2 2008 to $84.3 million ($ 0.66 per share) at the end of June 2009. Cash and cash equivalents too decreased from $ 314 million at the end of December 2008 to $ 276 million.

The company attributed the drop in profits to an $11.1 million charge related to the settlement agreement entered into with PCD in June 2009 consisting primarily of product warranty claims, $17.6 million in costs primarily for write-downs of excess inventory in relation to transactions with PCD and a $5.7 million increase in inventory write-downs for handsets in China.

For the operating expenses, the company attributed the rise to a $27.8 million restructuring charge primarily related to restructuring initiatives announced in June 2009, a benefit of $10.5 million related to the cash collection of doubtful accounts and a net gain of $1.4 million related to the sale of PCD assets.

“In June we announced a series of corporate initiatives that will significantly streamline the Company while focusing our resources on the products and regions most likely to drive revenue growth," said Peter Blackmore, UTStarcom''s chief executive officer and president. "Although the second quarter results were impacted by restructuring and other significant items, we are building momentum towards a better strategic position for 2010."

The company attributed the drop in sales to  PCD divestiture and decline in PAS business.