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Alvarion Profits Down 21% on Slower WiMAX Sales

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WiMAX equipement manufacturer, Alvarion has reported a 21% drop in its revenues for the 3rd quarter to $58.4 million, compared to $74.3 million in 2008. This was also a 0.6% drop on the revenues recorded in the second quarter of 2009.

The GAAP net loss in the third quarter of 2009 was $1 million, compared to a net profit of $800,000 in 2008 and a net loss of $4 million in Q2 2009.

WiMAX shipments were down 4% sequentially to $37.5 million, reflecting project delays, while revenues down 10% sequentially to $40.5 million.

"We achieved non-GAAP breakeven results on approximately the same level of revenues as the second quarter, as a result of higher gross margin from a favorable revenue mix combined with our success in improving operating leverage," said Tzvika Friedman, president and CEO of Alvarion. "Our challenge in Q3 related mainly to the impact on revenues of regulatory delays in making spectrum available and the tight credit environment which slowed the pace of some deployments. Meanwhile, fundamental demand remains robust, the WiMAX ecosystem is expanding, and operators are experiencing subscriber growth. As a result, operators' interest in our solution is also growing, and we continue to be encouraged by the gradual improvement in order intake.

"We expect a similar quarter in Q4, followed by a gradual recovery which is expected to begin during the first half of 2010 based on improving demand, plus our ability to reach revenue recognition milestones on projects already won. Catalysts for improving demand may include easing of tight credit conditions, new projects funded under the U.S. broadband stimulus program, and WiMAX license auctions in India. By the end of 2009, the result of streamlining and simplifying the organization will have taken full effect, bringing our revenue breakeven level to approximately $58 million. This will position us to benefit from further operating leverage as revenues improve.

"Longer term, we expect continued growth in demand for WiMAX based on low broadband penetration in many countries and continuing growth in demand for data-intensive applications on mobile platforms, aided by additional spectrum availability and the proliferation of new devices."

The company's revenue guidance for Q4 2009 is from $55 to $63 million.

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