Wireless broadband solutions provider Alvarion Ltd. (Nasdaq: ALVR; TASE: ALVR) has announced that it will be in default of a financial covenant under loan and credit facility agreements, including a $30 million loan obtained for the acquisition of Wavion Inc. The company added that it has initiated discussions with the respective banks.
Alvarion has also issued a profit warning and lowered its guidance for the first quarter of 2012 from its previous estimate of $38-43 million revenue to $33-33.5 million.
Regarding the lower guidance Alvarion said, "This is primarily as a result of lower than expected sales of an older product line, which the company currently intends to replace later this year, as well as a large order which has been delayed from the first quarter until the second quarter. Based on this estimated revenue, non-GAAP net loss per diluted share is expected to be $0.09-0.10 for the first quarter of 2012, compared with the company’s previous guidance of a non-GAAP net loss per diluted share of $0.01-0.06."
The company added, "GAAP per share results, which include charges of approximately $1.5 million related to the acquisition of Wavion in November 2011 and stock-based compensation, are expected to range be $0.12-0.13, compared with the company’s previous guidance of a per share loss of $0.03-$0.08. Cash and cash equivalents totaled approximately $51.5 million as of March 31, 2012."
Alvarion president and CEO Eran Gorev said, “Although we expected a decline in demand for certain older products ahead of their planned replacement later this year, we did not anticipate it would be of the magnitude we began to see in the last few weeks. We are reevaluating our plan to address certain vertical market applications with the aim of accelerating a solution."
He added, “In addition, a large order valued at over $3 million for our carrier-grade Wi-Fi solution has been delayed and we expect such order will be delivered in the second quarter. Nevertheless, we shipped over $5 million of this product line in the first quarter and we believe this portion of the business is on track to meet our expectations for 2012. During the first quarter, we won several large carrier-grade Wi-Fi deals with Tier 1 carriers in the Asia Pacific region."
Alvarion's share price is down 20% in premarket on Nasdaq to $0;73, giving a market cap of $41 million, after falling 18.5% on TASE following the profit warning.
Published by Globes, Israel business news - www.globes-online.com - on April 5, 2012
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