Alvarion's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Alvarion Ltd. (ALVR)

Q2 2012 Earnings Call

August 1, 2012, 09:00 am ET

Executives

Elana Holzman - VP Investor Relations

Hezi Lapid - CEO

Lior Shemesh - CFO

Analysts

Gunther Carter - Discovery Group

Robert Katz - Sunvest

Scott Searle - Unterberg Capital

Presentation

Operator

Ladies and gentlemen thank you for standing by and welcome to the Alvarion second quarter 2012 results conference call. For the conference, all the participants are in a listen-only mode. There will be an opportunity for your questions. Instructions will be given at that time. As a reminder, today's call is being recorded.

I will now turn the conference over to Vice President, Investor relations, Ms. Elana Holzman. Please go ahead.

Elana Holzman

Good morning everyone and thank you for joining us for Alvarion’s second quarter 2012 earnings conference call. I hope you have had an opportunity to review the press release we issued earlier today. You can find a copy on our website at www.alvarion.com. I am joined today by Hezi Lapid, President and CEO and Lior Shemesh, CFO. Hezi and Lior will provide an update on our business and second quarter results after which we will open the call for questions.

Before turning the call over to Hezi for his prepared comments, we would like to remind you that Hezi and Lior will be making certain forward-looking statements during the call. These statements are based on management’s current expectations and certain planning assumptions which are subject to various risks and uncertainties. Actual results may differ materially due to factors mentioned in today's call, in today's press release and as discussed in this conference call as well as in the risk factors included in our SEC filing.

We do not undertake to update the disclosure in light of new information or future event. Also, please note that certain financial measure we use in our results and on this call including the guidance we provide are expressed on a non-GAAP basis and have been adjusted to exclude certain charges. We have provided reconciliations of these non-GAAP financial measures to GAAP financial measures in the earnings release which can be found on the website.

Hezi?

Hezi Lapid

Thank you, Elana and hello everyone. The focus of our efforts since I joined Alvarion in May has been to put in place a turnaround plan and move forward with its execution. The first step which was already announced early in the quarter includes the various expense reduction measures, including a global wage reduction for all employees and Board members, along with adjustment for headcount.

We say at least, we implemented a new organizational structure, which we believe will streamline operations and enable us to manage more effectively and profitably. One of the key aspects of the new structure was establishment of a federal division dedicated to Alvarion's carrier license solution. We expect that the federal organization focused on the carrier license agreement with better control over cost, revenues and customer service will help this business reach profitability. This will also better position the entire Alvarion organization and executing on different target markets.

Another element of our turnaround plan, which is still ongoing, is an in-depth review of our value proposition in our target markets to assure that we are in the right markets and that our R&D roadmap is the right one going forward to win in these target markets. We also have very soon results of this review on the next quarterly all.

Moving to some project related update. During Q2, we began selling the BreezeCOMPACT, which is our small-footprint, high-capacity base station for the carrier license market. We see great enthusiasm for the product and are encouraged by market demand for it.

We also recently announced the new indoor carrier-grade WiFi access point which completes our WiFi offering which is now a full end-to-end WiFi solution for indoor and outdoor coverage. These new indoor solution is well suited to meet the data coverage and performance posed by large, crowded indoor spaces such as malls, hotels and airport at the right price point. These expense reductions and organizational changes new product introduction, another initiatives together, will put us on track for reaching growth and profitability.

I believe that we are definitely moving in the right direction. As you can see from our guidance, we expect Q3 to be better than Q2. We believe we are on track to reach our goal of at least breakeven operational cash flow in Q4 as the full impact of our cost reduction measures takes full effect.

Before turning the call to Lior, I would like to make one last comment about our NASDAQ listing. Our top priority over the last few months has been to put in place and begin cementing a turnaround plans for our volumes which we believe would be translated with times into shareholder value. At the same time, being listed on NASDAQ is important to us and therefore we are pursuing way to remain listed on NASDAQ.

Lior?

Lior Shemesh

Thank you, Hezi and hello everyone. In Q2 our revenues increased 1.5% sequentially to $33.8 million. The geographic breakdown are as follows, EMEA accounted for 39% of the total revenue compared to 56% in Q1, Latin America for 19% compared to 17% in Q1, North America for 17% compared to 12% and Asia-Pacific for 25% compared to 15% in Q1.

We added one [10%] customer in Q2 a clear WiFi customer serving operators in China. WiMAX operators in North America and Latin America were also large customer during this quarter.

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