Sources inform ''Globes'' that WiMAX solutions developer Alvarion Ltd. (Nasdaq: ALVR; TASE: ALVR) plans to fire 120-150 employees this week. "Globes" was the first to report, last week, that 30 employees would be cut, but it appears that the actual number will be much higher.
Alvarion has 887 employees worldwide, and the current layoffs could amount to nearly a fifth of the workforce. The layoffs are reportedly part of the company's ongoing streamlining measures, however the sheer scale raises the question whether the company is in financial trouble.
Since most of Alvarion's employees are in Israel, it seems likely that the Israeli operations will suffer most of the layoffs.
Investors who sought to understand more about the layoffs, and what the company's executives think, were out of luck. Top executives did not respond today to the report, since the company's results for the first quarter of 2010 will be published tomorrow, and management cannot discuss the issues. Ostensibly with the results tomorrow there will also be more information and a response to the report.
Analysts expect the company to swing to a loss on smaller revenue. The consensus estimate is for a loss per share of $0.02, compared with earnings per share of $0.01 for the corresponding quarter of 2009. They also predict an 18% drop in revenue to $55.7 million from $67.9 million.
In recent years, there has been concern over the hyping of mobile WiMAX technology rival LTE, which is due to enter the market on a wide scale in 2011. The current layoffs at Alvarion may be due to the company's difficulties in coping with the LTE challenge.
Leader Capital Markets analyst Eran Jacoby told "Globes" today that he attributes the layoffs at Alvarion to its new CEO, who is cleaning house at the firm. They could also be part of the company's efforts to again become profitable, and not merely to improve revenue. He said that the competition between mobile WiMAX and LTE is not the reason for the layoffs or for the company's problems, because mobile WiMAX supplements LTE, and the company has room to grow in the niche WiMAX market.
Alvarion suffered three rounds of layoffs during the recent economic downturn. The first included 70 layoffs in Israel, out of a total of 110. Then-CEO Zvika Friedman said at the time that the move was to keep Alvarion strong and prepared for the economic slowdown.
A second round came three months after the bankruptcy filing of Nortel Networks, with whom Alvarion had a strategic agreement.
In October, 2009, Globes was first to report another round of layoffs at the company, in which 25 positions were cut, mostly in Israel.
Alvarion's share price closed at $3.74 on Nasdaq on Friday, giving a market cap of $232 million. The share was unchanged by early afternoon on the TASE at NIS 13.69.
Published by Globes [online], Israel business news - www.globes-online.com - on May 3, 2010
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