Alvarion Ltd. (ALVRQ)

[midastouch017]

Alvarion Reports Fourth Quarter and Full Year 2005 Results

Wednesday February 8, 2:00 am ET

Resumed Sequential Growth
BreezeMAX(TM) Leadership Continues

TEL AVIV, Israel--(BUSINESS WIRE)--Feb. 8, 2006--Alvarion Ltd. (NASDAQ:ALVR - News), the world's leading provider of wireless broadband solutions and specialized mobile networks, today announced financial results for the fourth quarter and full year ended December 31, 2005.

Revenue for the fourth quarter reached $46.5 million, up 3% sequentially from $45.0 million in the third quarter of 2005. Revenue in Q4 2005 declined 17% from $55.9 million in the fourth quarter of 2004, primarily reflecting a higher revenue contribution from one large customer during the fourth quarter of 2004.

Gross margin was 45% in Q4 of 2005, consistent with Alvarion's target operating model.

On a GAAP basis, the company reported a net loss of $(4.9) million, or ($0.08) per share. This compares with a net loss of $(5.5) million, or $(0.09) per share in Q3 and a net loss of ($6.8) million, or ($0.12) per share in the fourth quarter of 2004, which included charges of $11.4 million representing a write-off of in-process research and development and acquisition related expenses.

Excluding amortization of acquired intangibles and deferred stock compensation of an aggregate of $1.1 million in the fourth and third quarters of 2005, and $0.8 million in the fourth quarter of 2004 as well as acquisition-related charges of $11.4 million in the fourth quarter of 2004, on a non-GAAP basis, Q4 2005 net loss was $)3.8( million, or ($0.06) per share, compared with a net loss of ($4.4) million, or ($0.07) per share in the third quarter of 2005, and a non-GAAP net profit of $5.4 million, or $0.08 per diluted share in Q4 of 2004. See the attached table showing the reconciliation of GAAP to non-GAAP figures.

Revenue for 2005 was $195.7 million compared with $201.5 million in 2004. Taking into account a very large deployment by Alvarion's largest customer in 2004, revenues from Broadband Wireless Access solutions, including BreezeMAX, Alvarion's flagship WiMAX platform, increased by 20% in 2005 over 2004.

On a GAAP basis, the company reported a net loss of ($13.6) million, or ($0.23) per share in 2005. This compares with a net income of $0.9 million, or $0.01 per share in 2004.

Excluding amortization of acquired intangibles and deferred stock compensation of an aggregate of $4.9 million and $2.8 million in 2005 and 2004, respectively, as well as acquisition-related charges of $0.9 million and $0.4 million in 2005 and 2004, respectively, and $11 million of in-process research and development write-off in 2004, on a non-GAAP basis, 2005 net loss was ($7.8) million, or ($0.13) per share, compared with a net income of $15.1 million, or $0.24 per share in the prior year. See the attached table showing the reconciliation of GAAP to non-GAAP figures.

Comments of Management

"We are pleased that we resumed sequential growth in Q4," said Tzvika Friedman, CEO and President of Alvarion. "Broadband wireless access revenue increased for both WiMAX and non-WiMAX based solutions in Q4.

"We were particularly gratified by the continued strong performance of our BreezeMAX product, which increased to about $10 million in revenue in Q4. Our fundamental business, primarily wireless DSL solutions, is performing well during the transition to WiMAX and should continue to be the main engine for growth in 2006. We have strengthened our position with some of the carriers we refer to as "innovative challengers" because they are early adopters of new technology, and we expect the overall upward trend to continue.

"Other significant developments in Q4 included the successful launch of the largest ever project for our cellular mobile unit, complete networks for the islands of Guadeloupe and Martinique by Outremer Telecom. We believe this will be an important reference account that will help us land more large orders for the cellular mobile unit In addition, a major Latin American customer has placed an initial $7 million order under a new frame agreement that could be worth up to $15 million., covering both BreezeMAX(TM) and eMGW(TM) products for several countries in Latin America.

"The fixed broadband wireless access market - both WiMAX and non-WiMAX - will be an important and growing market for the next several years," continued Mr. Friedman. "We continue to dominate the BWA market where we retain a 30% market share. Our leading position is evidence of our customers' satisfaction with our superior product offering and support.

"We continue to invest in building our company to be a major player in the growing WiMAX market for fixed, nomadic and mobile applications. We are focusing our investment on aggressively expanding our family of WiMAX solutions to include additional frequencies, additional marketing activities with Tier 1 carriers, mobile WiMAX development, affording our customers a smooth migration path to the recently ratified 802.16e standard, and development to enable an array of new services.

"While we continue our focus on retaining our leadership in this market, we will also pursue our commitment to realizing the vision of personal broadband to enhance lifestyles and improve productivity with our mobile WiMAX solutions. Moving true broadband from an entirely facilities-based offering to one that is an 'anytime, anywhere' personal offering will create a host of new opportunities in the telecom ecosystem. We are positioning Alvarion to be the partner of choice for operators, both new and incumbent, technology partners, and systems integrators as the market evolves."

Q1 Guidance

The Company's revenue guidance for Q1 2006 is $46 million to $51 million. At this revenue range, non GAAP per share results are expected to range between a loss of 3 and 6 cents per share. This guidance excludes expenses related to amortization of acquired intangibles and estimated recurring quarterly stock option expenses resulting from the adoption of SFAS 123R. Also excluded from non-GAAP guidance is a one-time positive cumulative effect of a change in accounting principle under SFAS 123R which cannot be quantified at this time. Since it is too early to indicate the impact of this one-time positive cumulative effect, the company will not provide GAAP earnings per share guidance.

Alvarion's management will host a conference call today, February 8, at 9:00 a.m. Eastern Time to discuss the quarter. To participate in the call, please dial one of the following numbers approximately five minutes prior to the scheduled start time: USA: [phone], International: [phone].

The public is invited to listen to the live webcast of the conference call. For details please visit Alvarion's website at www.alvarion.com. An archive of the on-line broadcast will be available on the website. A replay of the call will be available from 12:30 p.m. EDT on February 8, 2006 through 11:59 p.m. EDT on February 14, 2006. To access the replay, please call USA: [phone], International: [phone]. To access the replay, users will need to enter the following code: 813525.

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