Ceragon Networks Ltd. (Nasdaq: CRNT; TASE:CRNT) president and CEO Ira Palti predicts that the company will report sequentially lower revenue for the fourth quarter and says that it will streamline operations to meet its revised assumptions. Market sources believe that the company will fire 10% of its work force worldwide, some 70-90 employees, and 5% of its Israeli work force, about 17 employees.
Palti also predicts that business will pick up in 2013. Ceragon produces wireless backhaul solutions for telecommunications carriers.
"We are making excellent progress toward our profitability goal, said Palti, adding, "We remain optimistic about the business because we are well-positioned in an attractive sector that is likely to enjoy numerous growth drivers for years to come, but we are not immune to macroeconomic factors that are causing the second half of the year to be slower than originally expected."
Palti said, "After a dramatic pickup in bookings to record levels in the second quarter, we experienced a reversal in the order pattern in the third quarter. Although a portion of this change is accounted for by some large orders being delayed until the fourth quarter, due to the macroeconomic environment, we expect fourth quarter revenue to decline sequentially. With operators showing extreme caution regarding spending, sales cycles are lengthening and we are assuming no improvement from fourth quarter levels as we move into 2013.
"In light of our revised revenue assumptions, we are accelerating the implementation of some organizational changes to integrate certain administrative functions and combine our two solutions groups. We will also streamline our regional management structure in Asia. This will reduce our quarterly operating expenses by about 11% and help ensure that we can increase net profits next year despite temporary macro headwinds and provide additional operating leverage once top line growth resumes.
Ceragon's third quarter revenue rose 2% to $118 million from $116.1 million for the corresponding quarter of 2011, but was down 1% from $119.1 million for the preceding quarter.
GAAP-based net loss fell to $2.7 million ($0.07) per share for the third quarter from $6.7 million for the corresponding quarter, and non-GAAP net profit rose to $3.3 million ($0.09 per share) from $595,000.
Cash used in operations was $899,000 for the third quarter, and the company had $48.6 million in cash and cash investments at the end of September.
Latin America is Ceragon's largest market, accounting for 34% of its revenue for the third quarter, followed by Europe (23% of revenue), the Far East (16%), India (13%), and North America and Africa (7% each).
Ceragon's share price fell 10.3% on the TASE to NIS 18.65, following the announcement. The share price closed at $5.25 on Nasdaq on Friday, giving a market cap of $191 million.
Published by Globes [online], Israel business news - www.globes-online.com - on October 29, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012