Alvarion Has $15M Cellular Sell-Off

Alvarion Technologies Ltd. (Nasdaq: ALVR) says that it is selling its cellular mobile arm to LGC Wireless for $15 million so that it can concentrate all its efforts on the emerging broadband wireless market.

The Israeli firm says that it will sell substantially all of the assets of its cellular mobile unit (CMU) in exchange for $15 million in notes and the assumption of certain liabilities. The notes are due at the end of 2007 and 2008.

That Alvarion even had a cellular side business may be surprising to some. The company has been more closely associated with WiMax and pre-WiMax broadband technology throughout its more than ten-year history. (See Intel Gets Into Fixed Wireless and A Conflicted MAN?.)

The firm, however, did buy base-station vendor Interwave for GSM and CDMA smarts back in 2004. The buyout proved to be a difficult one right at the onset with troubles over the price. (See Alvarion Snaps Up InterWave and Alvarion Saves on InterWave.) Even buyouts couldn't give the company the heft needed to compete in the cellular market, contends Unstrung Insider analyst Gabriel Brown.

"Scale is absolutely critical to be a player in wireless infrastructure. It drives every aspect of the business, and Alvarion clearly didn't have anywhere near enough product volume to sustain a profit," Brown says. "It makes sense to focus resources on what they do well -- broadband wireless access. In this business they're a leading player and can use their scale to squeeze smaller competitors."

Alvarion says that its cellular unit contributed revenues of approximately $21 million in the first three quarters of 2006. In the third quarter of 2006, the firm reported total revenues of $54 million and said that a third of that could be attributed purely to WiMax infrastructure sales.

— Dan Jones, Site Editor, Unstrung

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