Alvarion Reports Record Revenues for Second Quarter 2007

Highlights:

* Record revenues of $57.5 million, up 31% from Q2 2006;
* Record BreezeMAXTM revenues of $27.9 million;
* Gross margin of 51%;
* Non-GAAP EPS of $0.03; GAAP EPS of $0.00;
* Positive operating cash flow of $2.6 million.

In the second quarter of 2007, revenues reached a new record of $57.5 million, an increase of 11% from $52.1 million in the first quarter of 2007, and 31% from $44 million in the second quarter of 2006.

GAAP net income in the second quarter of 2007 was $136,000, or $0.00 per share, which included income from discontinued operations of $618,000. Net loss from continuing operations was ($ 482,000) or ($0.01) per share, compared to a loss from continuing operations of ($1.1) million, or ($0.02) per share in Q1. Loss from continuing operations in the second quarter of 2006 was ($1.3) million, or ($0.02) per share.

Excluding the results of the discontinued operations, amortization of acquired intangibles and deferred stock compensation, on a non-GAAP basis, the company reported a net profit of approximately $2.0 million, or $0.03 per diluted share, compared with a non-GAAP net profit of approximately $1.3 million, or $0.02 per diluted share in the first quarter of 2007, and a non-GAAP net profit of approximately $1.0 million, or $0.02 per diluted share in Q2 2006.

The company generated positive cash flow from continuing operating activities of approximately $2.6 million during Q2 2007. Cash reserves as of June 30, 2007 totaled approximately $122 million, up from about $120 million in the previous quarter.

For supplemental information to facilitate evaluation of the impact of non-cash charges and comparisons with historical results of continuing and discontinued operations, see the attached table showing the detailed reconciliation of GAAP to non-GAAP results for Q2 2007 and the comparative quarters.

Comments from Management

“Q2 was a quarter of excellent execution that was reflected in strong bookings, acceleration of revenue growth and continued profitability,” said Tzvika Friedman, President and CEO of Alvarion. “Based on our performance during the first half, and the positive outlook for the balance of the year, we are raising our target for revenue growth in 2007 to 25-30% over 2006, versus our previous target of 15-20%.

BreezeMAX shipments amounted $34 million, and we ended the quarter with over 170 commercial WiMAX deployments, up from 150 at the end of Q1. The significance of these initial deployments is the broad base of satisfied customers they represent – from large incumbent carriers to new operators building their business model around WiMAX services.

We are also pleased to report that revenues in our non-WiMAX business exceeded expectations, growing 10% both sequentially and year-over-year. This performance reflects the quality of our products, strength of our channel partners and the breadth of our customer base.

Perhaps less apparent, but just as important, is the extensive internal development work, interoperability testing and other activities we are pursuing with our technical partners. In addition, we are cultivating relationships with strong local partners in key geographic regions and pursuing numerous business opportunities with our growing roster of ecosystem partners as part of our OPEN™ WiMAX initiative. Our excellent reputation and track record is also enabling a successful recruiting effort, as we position ourselves to play a leadership role in mobile WiMAX during the next phase of the market’s development.”-Alvarion news