Sequans says LTE more important than WiMAX in the long term

LTE is quickly becoming an important contributor to Sequans Communications' revenue stream, as the chipmaker's WiMAX business falters due to Sprint's shift away from that technology.

Sequans made that point in announcing its fourth-quarter and year-end 2011 financial results. The Paris-based company got its start in WiMAX chipsets, but branched into LTE chips in 2010 when that sector started gaining traction.

"Our Q4 results and Q1 guidance reflect the fact that our largest customer for WiMAX chips is continuing to focus on reducing inventory after an abrupt shift in strategy by Sprint in the U.S. Although new WiMAX devices were recently introduced by operators in Japan and Korea and we expect orders from our largest customer to resume in 2012, the market for WiMAX chips is expected to be smaller in 2012 than originally expected. Given our strong product offering, we anticipate continuing to have a major share of the available market," said Georges Karam, Sequans CEO.  

Karam said Sequans is targeting the LTE market for long-term growth and noted that although the company's second-generation LTE chips have only been sampling for a short time, Sequans has achieved design wins with nine device vendors. "These customers are working closely with operators in the largest LTE markets--the U.S., China and India, as well as in some smaller markets in Southeast Asia, Japan, the Middle East, Australia and Brazil," Karam said.

For fourth-quarter 2011, Sequans said its total revenue was $11.5 million, a sequential decrease of 56 percent from the third quarter of 2011 and a 50 percent decrease compared to the fourth quarter of 2010. Net loss was $5.6 million, or 16 cents per diluted share/ADS, compared to a net profit of $3.2 million, or 9 cents per diluted share/ADS in the third quarter of 2011 and a net loss of $2.8 million, or 10 cents per diluted share/ADS in the fourth quarter of 2010.

Sequans expects LTE revenue from data devices to begin ramping up during the second half of 2012. In addition, the company claims it is the only vendor offering a dual chip for devices supporting both WiMAX and LTE, which could benefit WiMAX operators planning a gradual transition to LTE.

In October 2011, Sequans introduced three FDD and TDD LTE baseband chips, a companion RF chip and two new LTE platforms, supporting all global FDD and TDD LTE networks. The company still has a viable WiMAX business as well. In January 2012, the company announced that it was providing the WiMAX chip inside the AAEON (an Asus company) Tough tablet PC from Japanese operator KDDI. HTC, Cisco and Huawei are among Sequans' other chip customers.

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