WiMAX Grows 23% sequentially; Breakeven Non-GAAP EPS
TEL AVIV, Israel - August 2, 2006 - Alvarion Ltd. (NASDAQ: ALVR), the leading provider of wireless broadband solutions and specialized mobile networks, today announced financial results for the second quarter ended June 30, 2006.
Q2 highlights:
- Continued sequential growth to $50.5 million
- BreezeMAX revenue increased 23% over Q1 to one-third of total revenue
- Breakeven non-GAAP EPS (GAAP loss of $0.45 per share)
- Self-install CPE and high power base stations began shipping in Q2
- First order for 802.16e-capable solution from Tier 1 carrier
- Demonstrated 802.16-e mobile WiMAX base station interoperability with various mobile WiMAX devices
Revenue for the second quarter reached $50.5 million, up 5% sequentially from $48.1 million in the first quarter of 2006. Revenue in Q2 2006 increased 7% from $47.0 million in the second quarter of 2005.
On a GAAP basis, the company reported a net loss of $(27.6) million, or $(0.45) per share, compared with a net loss of $(5.0) million, or $(0.08) per share in Q1 2006, and net loss of $(3.6) million, or $(0.06) per basic and diluted share in the second quarter of 2005.
During the early part of the second quarter, the rate of order intake in Alvarion’s cellular mobile unit (CMU) was lower than anticipated. As a result, management decided to refocus the business to concentrate on generating positive cash flow and conducted an impairment analysis of goodwill and other intangibles. As a result, the net loss in Q2 2006 includes a non-cash goodwill impairment charge of $23.4 million. In addition, Q2 includes a restructuring charge of $1.1 million relating to the re organizing and refocusing of the cellular mobile unit around its GSM business aimed at enabling this unit to be cash flow positive as soon as possible. Q2 net loss also includes amortization of deferred stock compensation of $1.7 million, and amortization of acquired intangibles of $1.1 million. Q2 of 2005 includes amortization of deferred stock compensation of $11,000 and amortization of acquired intangibles of $1.1 million.
Excluding amortization of acquired intangibles and deferred stock compensation, and one time charges, on a non-GAAP basis, Q2 2006 net loss was reduced to $(242,000), or ($0.00) per share, compared with a net loss of($2.4) million, or ($0.04) per share in the first quarter of 2006, and a non-GAAP net loss of $(2.5) million, or $(0.04) per share in Q2 of 2005.
For supplemental information to facilitate evaluation of the impact of non-cash charges and comparisons with historical results, see the attached table showing the detailed reconciliation of GAAP to non-GAAP for Q2 2006.
Comments of Management
“We are pleased with our progress in Q2,” said Tzvika Friedman, President and CEO of Alvarion. “We achieved our major objectives and exceeded several of our targets for Q2. Our revenue growth and high gross margin, combined with our success in reducing operational losses in the cellular mobile unit, enabled us to reach breakeven EPS on a non-GAAP basis. We are committed to profitability and generating cash, and this quarter represents solid progress.
“Alvarion continues to lead the industry in the adoption of WiMAX,” continued Mr. Friedman. “In Q2, WiMAX solutions contributed $17 million, about 33% of total revenue. Among our more than 70 commercial deployments are some of the largest and most successful anywhere in the world. We are please to see several satisfied customers expanding their networks for the second or third time, as new customers begin commercial deployment with smaller purchases, mostly of infrastructure.
“During Q2, we announced commercial availability of our self-install CPE based on Intel’s Rosedale chip and we fulfilled our commitment to the certification process. In addition, our 100+ active trials now include evaluations of our 802,16e-capable systems, as the market shifts its attention toward the 802.16e-2005 standard for all types of applications. We are pleased to report that we received our first order for a system based on the “e” standard during Q2 from a Tier 1 operator in the US. We believe our proven ability to deliver working solutions in a variety of frequencies on a timely basis, our large base of satisfied customers and extensive field experience will provide a significant advantage in competing with smaller competitors introducing 802.16-2004 based solutions as well as larger vendors coming into the market for the first time with 802-16e-2005 based solutions. We also believe our track record makes us an attractive partner for operators, system integrators, device manufacturers and other participants in the WiMAX ecosystem, and we are very focused on further developing these relationships.
“As the WiMAX technology leader, we were the first to reach another important milestone in Q2 by achieving interoperability between BreezeMAX and a variety of WiMAX mobile devices. BreezeMAX is the Radio Access Network of 4Motion, our complete WiMAX 802.16e-2005 solution portfolio that we are developing in conjunction with leading providers of core network and IP technology to make personal broadband anywhere a reality. We continue to target improved financial performance while devoting substantial resources to the development of mobile WiMAX in order to enhance our long term growth prospects.”
Q3 Guidance
The Company’s revenue guidance for Q3 2006 is $50 million to $54 million. At this revenue range, non-GAAP per share results are expected to range between ($0.01) and $0.02, GAAP per share results are expected to range between ($0.03) and ($0.06).
Alvarion’s management will host a conference call today, Aug 2, at 9:00 a.m. Eastern time to discuss the quarter. To participate in the call, please dial one of the following numbers approximately five minutes prior to the scheduled start time: USA: 612-288-0329, International: +1-612-288-0329.
The public is invited to listen to the live webcast of the conference call. For details please visit Alvarion’s website at www.alvarion.com. An archive of the on-line broadcast will be available on the website. A replay of the call will be available from 11:45 a.m. EDT on August 2, 2006 through 11:59 p.m. EDT on August 9, 2006. To access the replay, please call USA: (320) 365-3844, International: +1-320-365-3844. To access the replay, users will need to enter the following code: 835663.
About Alvarion
With more than 2 million units deployed in 150 countries, Alvarion is the world’s leading provider of innovative wireless network solutions enabling personal broadband services to improve lifestyles and productivity with portable and mobile data, VoIP, video and other applications. Providing systems to carriers, ISPs and private network operators, the company also supplies solutions to extend coverage of GSM and CDMA mobile networks to developing countries and other hard to serve areas.
Leading the WiMAX revolution, Alvarion has the most extensive deployments and proven product portfolio in the industry covering the full range of frequency bands with both fixed and mobile solutions. Alvarion’s products enable the delivery of business and residential broadband access, corporate VPNs, toll quality telephony, mobile base station feeding, hotspot coverage extension, community interconnection, public safety communications, and mobile voice and data. Alvarion works with several global OEM providers and more than 200 local partners to support its diverse global customer base in solving their last-mile challenges.
As a wireless broadband pioneer, Alvarion has been driving and delivering innovations for more than 10 years from core technology developments to creating and promoting industry standards. Leveraging its key roles in the IEEE and HiperMAN standards committees and experience in deploying OFDM-based systems, the Company's prominent work in the WiMAX Forum™ is focused on increasing the widespread adoption of standards-based products in the wireless broadband market and leading the entire industry to mobile WiMAX solutions. For more information, visit Alvarion’s World Wide Web site at www.alvarion.com
This press release contains forward -looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on the current expectations or beliefs of Alvarion’s management and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward -looking statements. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: inability to further identify, develop and achieve success for new products, services and technologies; increased competition and its effect on pricing, spending, third-party relationships and revenues; as well as the inability to establish and maintain relationships with commerce, advertising, marketing, and technology providers and other risks detailed from time to time in filings with the Securities and Exchange Commission.
Information set forth in this press release pertaining to third parties has not been independently verified by Alvarion and is based solely on publicly available information or on information provided to Alvarion by such third parties for inclusion in this press release. The web sites appearing in this press release are not and will not be included or incorporated by reference in any filing made by Alvarion with the Securities and Exchange Commission, which this press release will be a part of.
You may request Alvarion's future press releases or a complete Investor Kit by contacting Carmen Deville, Investor Relations: carmen.deville@alvarion.com or +1.650.314.2653.
