July 26 (Bloomberg) -- Alvarion Ltd. predicts sales of its network gear will rise next year as wireless carriers seek additional bandwidth to cope with more people using mobile phones to surf the Web, Chief Executive Officer Eran Gorev said.
“Networks can’t cope with the rise in demand,” Gorev said in a phone interview today. “They’re looking to offload some of the traffic onto other networks that are more cost-effective to deploy and maintain. We’re working on developing our portfolio in this area.”
Alvarion, based in Tel Aviv, sells systems based on so-called fourth-generation Wimax technology. In April, Sprint Nextel Corp., the third-largest U.S. wireless provider, agreed to pay Kirkland, Washington-based Wimax provider Clearwire Corp. at least $1 billion during 2011 and 2012 for the use of its network. Clearwire posted a net loss of $487 million last year.
Alvarion today said it had second-quarter net income of $319,000 after a loss of $10.6 million a year earlier, the first profit for the maker of wireless telecommunications equipment since the third quarter of 2008, according to Bloomberg data.
Alvarion climbed 9.6 percent to 5.71 shekels in Tel Aviv, the biggest increase since June 23, giving the company a market value of 331 million shekels ($97 million). The shares have lost 35 percent this year compared with a 6.7 percent drop for the TA-100 index.
“We referred to 2011 at the outset as a transition year where we wanted to stem or stop the decline,” Gorev said.
‘Staunch the Bleeding’
The company predicts quarterly revenue of about $50 million in coming quarters, he added. Second-quarter revenue rose to $55.4 million from $49 million a year earlier. Third-quarter results are likely to be either breakeven or show a modest loss, Alvarion said.
“What’s important is if this trend will continue,” said David Levinson, an analyst at Bank Hapoalim Ltd. “It isn’t an achievement if all you do is staunch the bleeding. They need to improve the business.”
Levinson is currently considering his recommendation of “underperform” on the shares. “There is definitely room for improvement when talking about long-term growth,” he said. “But I’m not buying into their plans so quickly.”
In New York, the company’s shares have fallen 34 percent this year, compared with a 7.1 percent gain for the Nasdaq composite index.
In early 2008, investors were willing to pay a 15 percent premium for Alvarion sales compared with sales of the Nasdaq Composite Index. Today they were paying a 77 percent discount.
There are 59 Israeli companies listed on the Nasdaq, the most of any country outside the U.S. after China.
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