Alvarion Takes Nortel Hit

Nortel Networks Ltd. 's bankruptcy knocked Alvarion Technologies Ltd. (Nasdaq: ALVR)'s revenues down in the fourth quarter, while restructuring charges pushed the WiMax vendor into the red.

Alvarion reported a fourth-quarter net loss of $4.8 million, or $0.08 per share, on revenues of $70.1 million. (See Alvarion Reports Q4.)

Fourth-quarter revenues were down 6 percent sequentially, compared to $74.3 million reported in the third quarter. The revenue drop is mainly due to Nortel's bankruptcy and subsequent dissolution of its strategic partnership with Alvarion. (See Nortel Flunks WiMax and Nortel Kills Mobile WiMax Biz.)

Alvarion was unable to recognize revenues of $2.4 million from equipment sales to Nortel in the fourth quarter after the Canadian vendor went into Chapter 11 bankruptcy protection in January. The WiMax vendor wrote off the cost of equipment related to the Nortel sales, which also hit the vendor's margins in the quarter. (See Nortel Files for Bankruptcy Protection.)

Alvarion's fourth-quarter loss included a restructuring charge of $3.4 million for expenses related to the cost reduction program announced in December that included 110 job cuts, or 11 percent of its workforce. (See Alvarion Cuts Jobs for Tough Times Ahead.)

Excluding the restructuring charge and other items, Alvarion reported net income of $119,000 in the fourth quarter, compared with net income of $3.1 million in the same period last year.

Who needs Nortel, anyway?
Compared with the fourth quarter last year, Alvarion's revenues were up 6 percent from $66.3 million. And WiMax revenues were up 21 percent to $43.9 million compared with the same period last year.

Alvarion claims its 2008 full year WiMax revenues set a new record for the company at $171 million, up 38 percent compared with 2007, representing 61 percent of the company's revenues.

In a press statement, Alvarion president and CEO Tzvika Friedman said the company had a "backlog of business twice as large" as it was this time last year.

"While decision cycles may lengthen and funding will remain an issue, we believe opportunities for a company our size remain abundant… Our goal for 2009 is to improve profitability for the year, even as growth slows temporarily due to global economic conditions,” he said.

Looking ahead to the first quarter, Alvarion expects revenues to be in the range of $65 million to $73 million. GAAP per share results in the first quarter are expected to range from a loss of $0.05 to earnings of $0.01.

— Michelle Donegan, European Editor, Unstrung