WiMAX vendor Alvarion announced a loss in the first quarter and said it would downsize its workforce as it struggles with delays in numerous large projects.
Alvarion said it planned to slash expenses by more than $30 million a year primarily through a 20 percent reduction in employees that should be completed this quarter. The vendor's shares were down 16 percent in Wednesday morning trading.
Alvarion reported a first-quarter net loss of 6 cents per diluted share. In the year-ago period, the vendor reported a profit of 1 cent per share. Revenue for the first quarter plunged 23.5 percent from the previous year's quarter to $51.9 million.
Alvarion's forecast had called for revenue of $50 million to $60 million, with per share earnings of between a loss of 7 cents and a profit of 1 cent.
"Some projects Alvarion was aiming for didn't come through," RBC analyst Daniel Meron told Reuters, such as those in the U.S. and India. "There are other contracts out there but they are much smaller. And there is heavy competition from Chinese vendors."
Meron has changed its valuation for Alvarion from "sector perform" to "underperform" with a target price of $3.50 instead of $5. Within the last four days, he has cut the stock's target price in half.
"The first quarter results... reflect continued delays in several business catalysts," said CEO Eran Gorev. He said the company has moved forward, winning several major projects in the Asia Pacific region, EMEA and North America. "The timing of actual orders is difficult to anticipate, but we hope to see some impact from these developments in 2010."
To make matters worse, Alvarion warned of another possible sequential decline in revenue but the company would not give a very detailed outlook because several large projects were in the works that could skew results for this quarter.
Back in February, Alvarion announced an improved fourth quarter in terms of net loss, but analysts remained concerned over the company's first-quarter revenue and profit guidance as well as Alvarion's announcement that an improvement would not likely come until the later half of the year.
For more:
- see this Reuters article
- see this release
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