Alvarion's biggest former customer goes bankrupt

Open Range Communications, which placed a $100 million order in 2009, has filed for Chapter 11 bankruptcy proceedings.

The largest former customer of Alvarion Ltd. (Nasdaq: ALVR; TASE: ALVR), broadband wireless service provider Open Range Communications Inc. has filed for Chapter 11 bankruptcy proceedings, two years after Alvarion signed a $100 million contract with it. Open Range's bankruptcy should not affect Alvarion's financial results, as the company stopped including Open Range in its business plans.

In June 2009, Alvarion announced that it would supply Open Range with 4G WiMAX components for the largest Rural Utilities Service (RUS)-funded deployment in the US at that time. The network was to span 17 states, 546 rural communities, and reach up to 6 million people. At the time, Alvarion said that the deal was worth $100 million over five years, but market sources thought it could reach $150 million.

Alvarion began deliveries and recorded income from Open Range, but subsequent delays and problems emerged that were unrelated to Alvarion. Open Range had problems complying with US standards because of problems with frequencies, but Alvarion was optimistic about its relations with the company. At the press conference following the publication of Alvarion's financial report for the second quarter, president and CEO Eran Gorev said that Open Range's frequencies problem had affected deployment, but he said that Alvarion was continuing deliveries, albeit at a slower pace than previously.

Open Range was founded in 2004 and raised $100 million from JP Morgan Chase Inc. (NYSE: JPM). It also received a $267 million loan from the US Department of Agriculture for the RUS program deployment.

Alvarion said in response, "Open Range's bankruptcy filing will not affect us. Alvarion's business plan for 2011-12 did not include Open Range. We have made no major shipments to it in the past few quarters, and basically prepared to stop working with it in late 2010."

Alvarion's share price rose 7.1% on Nasdaq yesterday to $1.06, giving a market cap of $66 million, but fell 6.8% by mid-afternoon on the TASE today to NIS 3.68.

Published by Globes [online], Israel business news - - on October 6, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018