The Chinese name for UTStarcom's mobile phone, which translates as "Little Smart," has become the generic name for all mobile phones in the rapidly developing Asian giant.
If the bulls are right, UTStarcom's overseas success will translate into smart profits for investors.
You'd never know that the telecommunications industry was depressed by looking at UTStarcom. The company, based in Alameda, Calif., has generated higher year-to-year sales and profits in each of the nine quarters it has been publicly traded.
Analysts, on average, expect sales of $880 million this year, a nifty 40 percent increase from 2001. They see earnings of 99 cents per share in 2002, up 38 percent from last year, and another 30-percent-plus gain in 2003.
What's UTStarcom got that other telecoms don't? A lock on China's upwardly mobile (phone) population, which accounted for 90 percent of sales last year.
UTStarcom's flagship product is its PAS (personal access system) wireless-telephone network. Outside China's big cities, PAS mobile phones substitute for landline phones, although they have all the bells and whistles of traditional wireless phones.
But PAS phones can't roam, meaning that users' phones work only within a prescribed local area.
China, whose economy is growing at about 7 percent per year, already has 5 million PAS subscribers using UTStarcom equipment. Considering that only 237 out of a possible 2,000 cities are PAS-ready, China alone represents a $20 billion potential market over the next 10 to 15 years, says Credit Suisse First Boston.
But UTStarcom isn't content with marketing just to China. Next year, it expects to derive about 20 percent of sales from other markets, including India, Latin America and Taiwan.
Despite its promise, investors should not overlook the considerable risk that UTStarcom represents. There is the obvious uncertainty of doing business in emerging markets. But the darkest cloud hanging over the stock (symbol UTSI) is the grudge investors have against the telecom industry for the debacle of the past two years.
The stock, which went public just a week before Nasdaq's March 2000 peak, once sold for $94. Recently, it fetched $20, or 20 times this year's earnings estimate.
Samuel May of U.S. Bancorp Piper Jaffray says the stock could reach $50 in the coming year. If it does, it will prove that a little smart goes a long way.