WiMAX equipment maker Alvarion Ltd. (Nasdaq: ALVR; TASE: ALVR) has apparently found a replacement for bankrupt Nortel Networks Ltd. (NYSE; TSX: NT). Recent reports claim that Nokia Siemens Networks has decided to transfer its WiMAX development budget to the LTE (Long Term Evolution) competing technology. "Light Reading" reports that Nokia Siemens wants to continue offering WiMAX to its customers, and that it will rely on multiple partners to do so, including Alvarion.
A year ago, Alvarion signed a cooperation agreement with Nortel with great fanfare. The agreement included the inclusion of Alvarion's WiMAX solution with Nortel products. The deal was estimated to be worth hundreds of millions of dollars over several years.
In addition to the importance of obtaining a broad marketing back, the agreement included investment by Nortel in Alvarion's R&D, estimated at tens of millions of dollars.
However, only a few months later, in January 2009, Nortel announced that it would seek bankruptcy protection, and the impact on Alvarion was not slow in coming. Alvarion's financial results took a hit, which it offset by cutting salaries. Alvarion president and CEO Zvika Feldman said at the time, "We will not concede a single dollar owed to us by Nortel."
Six months ago, Oscar Gruss analyst Jonathan Kreisman predicted that there was a strong likelihood that Nokia Siemens would turn its back on WiMAX, and that like Nortel, it would turn to Alvarion as a strategic partner.
The two companies already have an OEM agreement, and it cannot be ruled out that they will broaden their strategic agreement to cover investment by Nokia Siemens in Alvarion's R&D, similar to Alvarion's now defunct deal with Nortel. However, it seems that Alvarion will see far less revenue than it had expected to receive from its Nortel deal, at least in the initial stages.
Alvarion declined to comment to the report.
Published by Globes [online], Israel business news - www.globes-online.com - on July 6, 2009
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