Bethel Finance:Alvarion targets 5% non-GAAP operating profit margin

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Bethel Finance news:
Alvarion Ltd. (Nasdaq: ALVR; TASE: ALVR) has set a target of generating a non-GAAP operating profit margin target of 5% and positive cash flow for 2012. It also expects to have a cash balance of $65 million at the end of 2012, after capital expenditures and debt service, similar to its level at the end of 2011.

In the new strategic plan, Alvarion set an overall non-GAAP gross margin target of 45% for 2012 and an operating expenses cap of 40% of revenue. Taking into account the macro-economic outlook, management has based the plan on $185-195 million revenue in 2012, including $25 million revenue from Wavion products.

Looking beyond 2012, Alvarion projects revenue growth of 15-20% per year, with a gross margin of at least 45%, a non-GAAP operating margin of 10%, and sustained positive free cash flow after capital expenditures and debt service.

Alvarion's revised fourth quarter 2011 guidance, which will include Wavion’s results from November 23, predicts a non-GAAP loss per share of $0.03-0.04 on $42-44 million revenue.

Alvarions said that the resource reallocation part of the plan was designed to focus on business segments that it expects will be less sensitive to global economic conditions, and where the company can add significant value to customers. These include mobile operators with capacity and coverage solutions such as WiFi offload and distributed antenna systems (DAS) to enhance 3G/4G network performance, private networks in target vertical markets, BWA (broadband wireless access) service providers in certain rural and emerging markets, and WISPS (wireless internet service providers).

Alvarion president and CEO Eran Gorev said, “We have a great deal of confidence in our strategy. Implementing this operating plan will enable us to fully participate in new growth areas and to use our resources more effectively." He added, "Maintaining a strong balance sheet is important to Alvarion… Our 2012 plan is intended to generate positive operating cash flow such that, after capital expenditures and payment of the relevant portion of debt connected with the acquisition, we continue to have substantial financial flexibility to pursue our longer-term objectives."

Alvarion's share price fell 1.8% by midday on the TASE today, after rising 1% on Nasdaq yesterday to $1.01, giving a market cap of $63 million.