WiMAX developer Alvarion Ltd. (Nasdaq: ALVR; TASE: ALVR) is cutting 110 employees - 11% of its 1,000-strong global workforce as part of what it calls "proactive cost reduction initiatives". 70 of the layoffs will be in Israel. The company is also cutting managers' salaries.
Alvarion said that the measures will generate $15 million in annual savings. The goal is to lower "the company’s breakeven point to help preserve profitability in the slowing global economy, while also maintaining its capability to continue growing if business conditions support growth."
The measures will result in a one-time cost of $3 million in the fourth quarter of 2008, which was not included in the guidance for the quarter. The company said that, except for this charge, its guidance remains unchanged.
Alvarion predicts $70-78 million revenue for the fourth quarter, below the analysts' consensus of $80.6 million. On the basis of the guidance, the company will report $281.2-289.2 million revenue for the year, 18.8-22.2% more than in 2007. The company also expects non-GAAP earnings per share of up to $0.07 for the fourth quarter ($4.5 million), which equals the upper limit of the analysts' consensus. On the basis of the guidance, the company will report a non-GAAP net profit of $6.8-11.3 million for the year.
Alvarion president and CEO Tzvika Friedman said, “To ensure that we are operating as efficiently as possible, we made the difficult decision to reduce headcount even as we target growth in 2009. Our employees are a major asset of our company, so it is with considerable reluctance that we are moving ahead with this action." He added, “We have not experienced order cancellations or push-outs so far in fourth quarter, but we see lengthening sales cycles, and we remain cautious about the potential effect of the economic climate on WiMAX-related spending decisions as we move through next year."
Alvarion's share rose 10.5% yesterday on Nasdaq to $3.89. The share rose 3.4% by midday on the TASE to NIS 16.19. The share has fallen 57% on the TASE since the beginning of the year.
Published by Globes [online], Israel business news - www.globes-online.com - on December 8, 2008
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