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Airvana Talks 4G & Femtos

Dan Jones
LR Mobile News Analysis
Dan Jones, Mobile Editor

CDMA equipment maven Airvana Inc. is hedging its bets on which technologies it will support as the market lurches toward fourth-generation wireless networks, but it is already clear that the company may choose not to go with the CDMA specification being touted as the 4G evolution of that standard.

Airvana CEO Randy Battat sees 4G networks becoming commercial in 2010 or 2011. He says it's "too soon to say" which technology will be adopted by carriers for wireless broadband, but it may not be the ultra mobile broadband (UMB) 4G CDMA standard.

"It feels like the world seems to be moving to LTE [the 4G version of GSM], and Sprint has gone with WiMax for now," Battat notes. "We're not sure what the opportunity will be for UMB. We're less zealous about that than you might expect from the CDMA camp."

Airvana, which reported its third-quarter results today, has made a name for itself as a supplier of CDMA evolution, data only (EV-DO) wireless networking kit. The firm OEMs equipment and produces software for several major suppliers, with Nortel Networks Ltd. its biggest customer. (See Airvana Reports Q3.)

Airvana is starting to add other networking technologies to its portfolio, however, through its move into the femtocell home basestation market. Airvana recently inked a femto deal with Nokia Networks and plans to support both GSM and CDMA 3G flavors in this emerging market. "We're seeing a lot of interest from carriers all around the world," Battat says. "We're going into trials this quarter and we'll have product out in the second half of 2008." In the meantime, Airvana is expecting more business in 2008 from carriers looking to upgrade the capacity of their CDMA EV-DO networks as demand for wireless data grows in the U.S. Verizon Wireless 's data revenue grew 63 percent year-on-year during the summer quarter, Battat notes. "EV-DO traffic is doubling year-on-year," he claims.

This wireless growth, however, is not particulary evident in the Chelmsford, Mass.-based firm's latest numbers. Airvana reported a third-quarter loss of $18.2 million on revenues of $3.6 million, compared to a loss of $14.8 million on revenues of $1.5 million in the third quarter of 2006. In the second quarter, the firm netted $86.1 million on revenues of $156.3 million.

These serious income swings occur because, under 1997 rules, Airvana has to defer revenue on the software side of its business until it ships promised upgrades, Battat says. "Smart investors look at the billings. We billed a little over $30 million this quarter."

Unfortunately for Airvana, the market seems to have its eye on the firm's widening losses. The company's shares were down 35 cents (4.9%) at $6.85 in late afternoon trading.

— Dan Jones, Site Editor, Unstrung

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