Monday, May 3, 2010

Alvarion's Q1 Revenue Slides, Restructuring Announced

Citing WiMAX customer deployment delays, Alvarion reported Q1 2010 revenue of $51.9 million, a decrease of 13.8% from $60.2 million in the fourth quarter of 2009, and a decrease of 23.5% from $67.9 million in the first quarter of 2009. GAAP net loss in the first quarter of 2010 was ($4.9) million, or ($0.08) per share, compared to a net loss of ($1.3) million, or ($0.02) per share in Q4 2009. GAAP net loss in the first quarter of 2009 was ($0.8) million, or ($0.01) per share.

"Q1 results were within the range of our guidance and, as expected, reflect continued delays in several business catalysts," said Eran Gorev, President and CEO of Alvarion. "Meanwhile, we continued the expansion of our business with several existing customers and made important progress toward securing several major projects in Asia Pacific, EMEA and North America. The timing of actual orders is difficult to anticipate, but we hope to see some impact from these developments in 2010. We are using the delay in the business catalysts to strengthen our capabilities in order to capture a larger share of the projects once the vendor selection processes move forward."

Alvarion said it continues to see significant opportunities in the WiMAX carrier market as well as in the Enterprise space. Nevertheless, the company has launched a restructuring with the following objectives:

  • Transform the company into a full-fledged solution provider by adding professional services capabilities to capture a larger share of each project

  • Build key account teams to focus on larger end-to-end projects

  • Expand local presence in key regions, including local manufacturing

  • Implement an immediate headcount reduction of about 20% in order to reduce expenses by about $30 million on an annual basis.

"After a thorough business review, we are moving decisively to implement a two-stage plan, continued Mr. Gorev. "First, we are transforming the organization, including our cost structure, into one that will best serve our near-term strategic business objectives. These changes will allow us to more effectively focus on the right opportunities, deliver end-to-end network solutions including professional services, and, in turn, capture a larger proportion of the total project dollars than we have in the past.

"The second stage of our plan will focus on positioning Alvarion for profitable growth in the increasingly complex multi-technology environment that will evolve over the next couple of years. We intend to complete the process and begin to implement the next phase of our plan during the second half of the year."