Nortel will discontinue its mobile WiMAX business and end its joint agreement with Alvarion. The agreement, announced in June 2008, outlined the integration of Alvarion’s advanced radio access network technology with Nortel’s core network solutions, backhaul solutions, and global services. It also covered the resale by Nortel of the Alvarion platform of WiMAX access products.
Nortel said its decision will allow it to narrow its focus, better manage its investments and strengthen its broader carrier business to better position itself for long-term competitiveness.
“We are taking rapid action to narrow our strategic focus to areas where we can drive maximum return on investment. We will work closely with Alvarion to transition our mobile WiMAX customers to them and assure customers that they will continue to benefit from leading-edge technology and high-quality service,” said Richard Lowe, president of carrier networks, Nortel.
For its part, Alvarion is said it is analyzing Nortel’s decision and will take action to mitigate the impact on its business, and expects to provide more information about these actions during its fourth quarter 2008 financial results conference call on Wednesday, February 4, 2009. Under the terms of the agreement, Nortel is obligated to pay Alvarion for certain research and development services beyond Q4; however, collection of these payments is uncertain and subject to Nortel’s creditor protection proceedings.
As a result of the foregoing, 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.
Tzvika Friedman, President and CEO of Alvarion, said,”We are obviously disappointed in the direction this has taken; however, Alvarion’s industry position has never been stronger. In Q4, our WiMAX shipments, excluding Nortel, reached a record $54.4 million and WiMAX revenues were $42.3 million. Our book-to-bill remained well above 1, and we ended the year with over $140 million in cash on our balance sheet.”http://www.nortel.com/http://www.alvarion.com
