Last night Nortel (NT) issued news that it is pulling out of the mobile WiMAX business and, therefore, curtailing its strategic agreement around WiMAX with Alvarion (ALVR).
The long-suffering Nortel, which recently filed for Chapter 11, did this so it could focus its resources on existing customers, it said.
The companies last summer forged a deal through which Nortel will sell Alvarion’s WiMAX access products. The relationship also entailed Nortel providing Alvarion with resources and funding to promote the advancement of its WiMAX base stations.
While Nortel is supposed to pay Alvarion for certain research and development services beyond the fourth quarter, whether that will actually happen is up in the air.
That’s bad news for Alvarion, of course, which is taking a $2.4 million hit. That’s how much it expected in revenue from Nortel, which was supposed to buy its products, in the fourth quarter of 2008. Still, Alvarion expects to realize its fourth quarter guidance of $70 million for the fourth quarter of 2008, but it will be at the low end of the expected range.
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.”
