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Company News

UPDATE 1-Alvarion shares dip on Q2 loss, CEO to quit

* Q2 loss widens to 6 cents a share

* Sales drop 16 percent to $58.7 million

* Sees Q3 loss of 2-9 cents a share

* Shares down 3.9 percent

(Adds more details, share reaction, CEO/analyst comments)

By Joseph Nasr

JERUSALEM, July 29 (Reuters) - Israel's Alvarion Ltd ALVR.O, a maker of wireless telecom equipment, on Wednesday reported a wider quarterly loss and its president said he planned to quit, sending its shares down 3.9 percent.

Alvarion ALVR.TA posted a second-quarter net loss of $4 million, or 6 cents a share, compared with a loss of $812,000, or 1 cent a share, in the same period last year.

Excluding amortization, stock compensation expenses and other charges, the company posted a loss of $605,000, or 1 cent a share, compared with income of $1.7 million, or 3 cents per diluted share, the same period a year ago.

Sales fell 16 percent to $58.7 million.

Alvarion also said that president and chief executive officer Tzvika Friedman had requested to resign but he would stay on until a replacement is found.

Friedman said he expected gradual improvement in profitability in the second half of 2009.

“We are encouraged by the improvement in order intake in the second quarter as well as by several major strategic customer wins which we expect to translate into hundreds of millions of dollars in future revenues,” Friedman said.

Alvarion, which has won big broadband contracts in the U.S. and Italy, forecast a third-quarter net loss of 2 to 9 cents. Excluding one-time items it expects a loss of 6 cents per share to a profit of 1 cent a share.

It estimated revenues in the third quarter to range between $53 million and $63 million.

“The most important thing, in our view, is to get a better read into the profitability of the new contracts in the U.S. and in Italy,” Gilad Alper, an analyst at brokerage Nessuah Excellence, wrote in a client note.

“Our concern is that being large contracts, they are likely to carry lower-than-average profitability, which in Alvarion’s case is bad news,” Alper added.

Alper said he expected the company to break even in the third quarter with revenues of $63 million. He maintained a “market perform” rating.

Alvarion’s shares were down 3.9 percent at 17.21 shekels at 0920 GMT in a flat broader Tel Aviv market. (Editing by Steven Scheer and Mike Nesbit)

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