Nortel and Alvarion to Break-Up WiMAX Partnership

Published on: 30th January 2009

Nortel, which is currently seeking bankruptcy protection, and Alvarion are to break up their WiMAX joint venture - which was only entered into last June. Alvarion says that it is analyzing the details of actions it will take to mitigate the impact on its business, and expects to provide more information about these actions during its fourth quarter 2008 financial results conference call next month

The joint strategic WiMAX agreement covers, among other things, the resale by Nortel of the Alvarion platform of WiMAX access products and Nortel's contribution of resources and funding to accelerate Alvarion's development of its portfolio of WiMAX base stations. Under the terms of the agreement, Nortel is obligated to pay Alvarion for certain research and development services beyond Q4; however, collection of these payments is uncertain and subject to Nortel's creditor protection proceedings.

As a result of the foregoing, Alvarion will not be able to recognize approximately $2.4 million of revenues from the sale of products to Nortel during the fourth quarter of 2008. Accordingly, total revenues for the fourth quarter ended December 31, 2008, are expected to be approximately $70 million, at the low end of the Company's revenue guidance of $70 to $78 million, as presented in its Q3 financial results press release on November 3, 2008.

Tzvika Friedman, President and CEO of Alvarion, said, "We are obviously disappointed in the direction this has taken; however, Alvarion's industry position has never been stronger. In Q4, our WiMAX shipments, excluding Nortel, reached a record $54.4 million and WiMAX revenues were $42.3 million. Our book-to-bill remained well above 1, and we ended the year with over $140 million in cash on our balance sheet.

"This action, while difficult, was a necessary step addressing Nortel's current situation and intention to narrow the company's focus," said Richard Lowe, President, Carrier Networks, Nortel. "Planning is underway to transition our joint mobile WiMAX customers to Alvarion and ensure there is no disruption to service or support."

 

Tags: [ptc]  [base station]  [wimax]  [mobile wimax]  [itu]  [nortel]  [bankruptcy]  [alvarion]  [research and development]