Nortel exits mobile WiMAX business

Bankrupt Nortel announced its intention to end its mobile WiMAX strategic agreement with Alvarion and exit the mobile WiMAX business altogether. The company said it believes that such a move will narrow Nortel's strategic focus in wireless and help it position the company to stabilize its finances.

Nortel will transition its mobile WiMAX customers to Alvarion, while continuing its focus on LTE technology, which it believes is correctly suited to Nortel's existing customer base. The company is currently in trials with Verizon and T-Mobile and have won a contract to provide the LTE core network to KDDI in Japan in conjunction with Hitachi.

For Alvarion, the end of the joint venture doesn't look good. The joint strategic WiMAX agreement covers, among other things, the resale by Nortel of the Alvarion platform of WiMAX access products and Nortel’s contribution of resources and funding to accelerate Alvarion’s development of its portfolio of WiMAX base stations. Under the terms of the agreement, Nortel is obligated to pay Alvarion for certain research and development services beyond the fourth quarter. However, collection of these payments is uncertain and subject to Nortel’s creditor protection proceedings, Alvarion said.

As a result, Alvarion will not be able to recognize approximately $2.4 million of revenues from the sale of products to Nortel during the fourth quarter of 2008. Accordingly, total revenues for the fourth quarter ended December 31, 2008, are expected to be approximately $70 million, at the low end of the company’s revenue guidance of $70 to $78 million, as presented in its third-quarter financial results press release on November 3, 2008.

In June 2008, Nortel announced it was throwing most of its resources at LTE and teaming with Alvarion to provide an end-to-end mobile WiMAX system. It had never really garnered the mobile WiMAX contracts it was looking for. Now most of the major operators have chosen LTE as their 4G path.

For more:
- see the release

Related articles:
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Nortel teams with Alvarion on WiMAX; focus moves to LTE
Alvarion to cut jobs, costs amid uncertain 2009
Alvarion's position in mobile WiMAX grows stronger