Published on 10 March, 2009
|Alvarion's 2009 plan targets profitable growth by implementing proactive cost reduction initiatives |
Alvarion Ltd., the world's leading provider of WiMAX
™ and wireless broadband solutions, recent announced that it will implement proactive cost reduction initiatives aimed at lowering the company's breakeven point to help preserve profitability in the slowing global economy, while also maintaining its capability to continue growing if business conditions support growth.
As part of this series of initiatives, the company plans to reduce its global workforce by approximately 11%, from a base of about 1000 employees. In addition, Alvarion is implementing company-wide measures including management salary reductions. The combined initiatives are expected to generate annual cost of goods and operating expense savings of about $15 million. Alvarion expects these initiatives to be implemented before the end of the year and expects to take a one-time charge of approximately $3 million in the fourth quarter of 2008. This charge was not included in the company's fourth quarter earnings guidance provided on November 3, 2008. Except for the one-time charge, the outlook for the fourth quarter remains unchanged.
"To ensure that we are operating as efficiently as possible, we made the difficult decision to reduce headcount even as we target growth in 2009," said Tzvika Friedman, president and CEO of Alvarion. "Our employees are a major asset of our company, so it is with considerable reluctance that we are moving ahead with this action. However, taking steps to preserve our strong financial and competitive position is a necessary response to the current macro-economic uncertainty. We appreciate the contributions of all Alvarion employees, and we are enormously grateful to those affected by today's announcement for all they have done to make Alvarion the company it is today."
"We have not experienced order cancellations or push-outs so far in Q4, but we see lengthening sales cycles, and we remain cautious about the potential effect of the economic climate on WiMAX-related spending decisions as we move
through next year," Mr. Friedman continued. "Therefore, our operating plan for 2009 contains twin goals of continued revenue growth from strong, well-funded operators, and a lower breakeven point to help preserve our profitability and financial flexibility if business conditions worsen. Our plan calls for lowering our non-GAAP operating profit breakeven point (which excludes stock-based compensation expense and any one-time charges) to below $70 million in revenue per quarter, based on a lower gross margin level of about 45%. Equally important, our plan also maintains our capability to grow revenues as much as 15% over 2008 without increasing fixed expenses, assuming business conditions will support such growth. We believe this plan appropriately balances both short-term uncertainties and long-term prospects.
"To ensure that we are operating as efficiently as possible, we made the difficult decision to reduce headcount even as we target growth in 2009," said Tzvika Friedman, president and CEO of Alvarion
"Although these were difficult decisions to make, we believe the initiatives announced today will further strengthen our position as a fast-acting and flexible company able to demonstrate an unwavering long-term commitment to WiMAX and to our broad base of customers and strategic partners."
Management will host a conference call today at 8:30 am EST to respond to questions from the investment community about the cost reduction initiatives announced today.