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| WiMAX™ demand drives BreezeMAX® shipment growth of 37% in 2008 to a new record |
Q4 Highlights (compared to Q4 2007):
- WiMAX shipments up 55% to record $57.7 million
- WiMAX revenues up 21% to $43.9 million
- Non-GAAP EPS was breakeven; GAAP net loss was ($0.08), including restructuring charge
2008 Highlights (compared to FY 2007):
- WiMAX shipments increased 37% to a record $189.3 million
- WiMAX revenues increased 38% to a record $171 million
- Non-GAAP EPS of $0.11 compared to $0.14 in 2007
- GAAP loss of ($0.09) per share compared to GAAP EPS from continuing operations of $0.11 in 2007
In the fourth quarter of 2008, revenues were $70.1 million, a decrease of 6% from $74.3 million in the third quarter of 2008, and increase of 6% from $66.3 million in the fourth quarter of 2007.
GAAP net loss in the fourth quarter of 2008 was ($4.8) million, or ($0.08) per share, which included a restructuring charge and related expenses of $3.4 million in connection with the cost reduction initiatives that were implemented in December 2008, compared to net income of $803,000, or $0.01 per share in Q3.
Excluding the amortisation of intangibles and stock based compensation expenses, other income, restructuring charge and related expenses, and the results of discontinued operations, on a non-GAAP basis, the company reported net income in the fourth quarter of 2008 of approximately $119,000, or $0.00 per diluted share, compared with non-GAAP net income of approximately $3.0 million, or $0.05 per diluted share in the third quarter of 2008, and non-GAAP net income of approximately $3.1 million, or $0.05 per diluted share in Q4 2007.
The sequential decline in revenues was primarily a result of Alvarion's inability to recognize $2.4 million of revenues from the sale of products to Nortel Networks during the fourth quarter of 2008 after Nortel filed for bankruptcy protection on January 14, 2009 and subsequently repudiated the joint WiMAX agreement between the two companies. The decline in Q4 gross margin was due to the write-off of the cost of the equipment related to the Nortel sales in the period.
For the full year 2008, revenues totaled a record $281.3 million, an increase of 19% over $236.6 million in 2007. WiMAX revenues set a new record of approximately $171 million, about 61% of total revenues in 2008, compared with approximately $124 million, representing about 52% of total revenues, in 2007. WiMAX shipments for the year reached a new record of approximately $189 million.
For 2008, net loss was ($5.5) million, or ($0.09) per share compared with net income from continuing operations of $7.1 million, or $0.11 per share in 2007.
Excluding the amortization of intangibles and stock based compensation expenses, other income and restructuring charge and related expenses and the results of the discontinued operations, non-GAAP net income for 2008 was $6.9 million, or $0.11 per diluted share, compared with non-GAAP net income of $8.8 million, or $0.14 per diluted share in 2007.
As anticipated, gross margin in 2008 declined primarily due to a shift in product mix. In addition, unfavorable foreign currency translation during the first three quarters contributed to the margin decline.
WiMAX revenues set a new record of approximately $171 million, about 61% of total revenues in 2008, compared with approximately $124 million representing about 52% of total revenues, in 2007 |
Cash reserves as of December 31, 2008, totaled approximately $141 million, after using $5 million to repurchase Alvarion shares during the fourth quarter.
For supplemental information to facilitate evaluation of the impact of non-cash charges and comparisons with historical results of operations, see the attached table showing the detailed reconciliation of GAAP to non-GAAP results for Q4 2008, the full year 2008 and the comparative periods.
Comments from management
"In 2008, WiMAX continued to exhibit strong demand, despite concerns over a spreading global recession," said Tzvika Friedman, president and CEO of Alvarion. "We are very pleased with our record level of WiMAX shipments and our book-to-bill ratio of well over 1 in Q4. We are further encouraged by the fact that we are entering 2009 with a backlog of business twice as large as we had a year ago. Our non-WiMAX business was stable in 2008 and we expect it to remain so in 2009.
"Demand for primary broadband connectivity and mobile data usage are both in long term growth trends that require new solutions that improve the total cost of ownership for operators," continued Mr. Friedman. "There are many well-funded operators, including Tier 1 and Tier 2 carriers, around the globe embracing rather than resisting change and planning to use WiMAX to bolster their competitive advantage. While decision cycles may lengthen and funding will remain an issue, we believe opportunities for a company our size remain abundant.
"Our immediate challenge is to continue to win major deals while supporting existing customers' rollout plans, and to take a larger share of the available business in a very competitive environment. We are, and intend to remain, among a handful of top end-to-end solution providers that will win the bulk of the WiMAX business in years to come. Meanwhile, we will be stretching farther to be as efficient as possible. Our goal for 2009 is to improve profitability for the year even as growth slows temporarily due global economic conditions."
Q1 2009 guidance
The company's revenue guidance for Q1 2009 is $65 to $73 million. Based on the indicated revenue range, Q1 non-GAAP per share results are expected to range between ($0.02) and $0.04. GAAP per share results are expected to range between a loss of ($0.05) and earnings per share of $0.01.
