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Ceragon's Backhaul Sales Slow

Michelle Donegan
Wireless Bits
Michelle Donegan

12:30 PM -- Wireless backhaul specialist Ceragon Networks Ltd. (Nasdaq: CRNT)'s share price dropped more than 15 percent today after it announced lower than expected revenues in preliminary first-quarter results. (See Ceragon Posts Prelim Q1.)

The Israeli company said that longer sales cycles were to blame for the decline in revenues this quarter and that its deal flow is low. Revenues are expected to be in the range of $43 million to $45 million, compared with $47.2 million in the first quarter last year and compared to $56.8 million in the previous quarter.

"Decision cycles are taking much longer," said Ira Palti, Ceragon's president and CEO on a conference call with analysts and media today. "What took six months now takes around 12 months. If a project was 12 months, it now takes 18 months. C-level [execs] ask an additional five questions. Everything takes longer."

Palti also noted that operators are being much more careful about synchronizing purchasing decisions with their ability to install and deploy the backhaul equipment.

Geographically, Palti said the entire Asia/Pacific region was the main source of weakness in the first quarter, while sales in Europe were flat and sales in North America and Latin America "grew a little bit quarter over quarter." North America is a bright spot where the company sees "some improvement in demand." (See Sprint's WiMax Backhaul RFP.)

Ceragon expects the second quarter to be much the same, but noted that visibility is low for the second half of the year.

Given the slowing sales, the company says it has cut operating expenses across the company, such as marketing, sales, and some R&D costs. But it has not reduced headcount or salaries at this point.

Are other vendors feeling the pinch from operators delaying backhaul spending? (See Ceragon Gets LTE Ready, DragonWave Cuts Staff, Is DragonWave Ripe for Takeover? , and Ceragon Rides Backhaul Wave.)

— Michelle Donegan, European Editor, Unstrung

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