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Alvarion shares jump as revenue rises

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WiMAX and wireless broadband solutions developer Alvarion Ltd. reported record revenue of $69.7 million for the second quarter.

About $38 million, or 55% of revenue, was from WiMAX sales, specifically its BreezeMAX line. WiMAX revenue rose 36% compared to the corresponding quarter.

Total revenue represented a 21% increase from $57.6 million in the corresponding quarter of 2007, and a 4% increase from $67.2 million recorded in the first quarter of 2008.

Analysts had expected about $69.5 million in revenue for the current quarter.

The firm recorded a GAAP-based net loss in the second quarter of 2008 of $812,000, or $0.01 per share, compared to GAAP-based net income of $136,000, in the corresponding quarter of 2007.

Non-GAAP net profit reached $1.7 million, or $0.03 per diluted share, which matched analysts estimates. In the corresponding quarter, non-GAAP net profit was $2 million, or $0.03 per diluted share.

Alvarion president and CEO Tzvika Friedman noted the effect of currency fluctuations on revenue results, and emphasized the firm's efforts to mitigate negative impacts. “On a constant dollar basis, we have also achieved our profitability targets for the second quarter; however, the significant change in the dollar versus the shekel masks the excellent progress we have made in improving our operating leverage. The dollar has declined approximately 6% from the end of the first quarter until the end of the second quarter, and has declined over 12% since the end of 2007 and we continue to focus on mitigating the unfavorable currency impact to the maximum extent possible.

“Meanwhile, current customers are expanding their networks, bookings are strong, and the pipeline of potential new business is large and growing. This further increases our confidence in our ability to achieve the upper end of our target revenue range of $275 to $300 million for 2008.”

The company’s revenue guidance for the third quarter is $73 to $77 million. Non-GAAP earnings per share should range between $0.02 and $0.06.

Shares in Alvarion are up over 8% in Tel Aviv Stock Exchange (TASE) trading today.

Leader Capital Markets analyst Eran Jacobi reiterated his third quarter forecast of earnings of earnings per share of $0.02-0.06 on $75 million revenue for Alvarion. The market consensus is earnings per share of $0.05 on $74.6 million revenue. He adds that the company's announcement of a $30 million share buyback, when the company has $140 million in cash and a positive cash flow from operations, is real news for shareholders.

Jacobi says that the share buyback is a kind of dividend, given Alvarion's trading volume on Nasdaq and the TASE. It also sets a floor for the share. He adds that in view of the company's leadership in the WiMAX field, the share buyback is a better idea than seeking small companies in the industry for acquisition.

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