Bad Times Still Good for Alvarion

Sometimes good is good enough for investors, particularly when the market hopes for the best but anticipates the worst in a gloomy economic environment. For wireless broadband infrastructure supplier and Motley Fool Rule Breakers recommendation Alvarion (Nasdaq: ALVR  ) , more of the same in its first-quarter results enthused investors enough to bid the stock up more than 10% after the announcement.

Revenue growth remained strong at Alvarion, with the company reporting $67.2 million in sales for the quarter, up 29% from last year. Costs still kept the bottom line in the red, however, as the company reported a GAAP net loss of $601,000. Profitability is still being challenged by a number of factors, including higher operating expenses and unfavorable exchange rates that the company already noted would constrain profits last quarter.

Despite the GAAP loss, an $8.8 million gain on the sale of an investment brought positive cash flow to Alvarion, which now sits on $148 million in cash. With plenty of cash resources, the company noted that it will continue to spend money to win new business. This confidence in opportunities to grow stands in contrast to the gloom still surrounding major WiMAX aspirants Sprint Nextel (NYSE: S  ) and Clearwire (Nasdaq: CLWR  ) , service operators that have been reviewing network expansion plans in light of a tough market.

One key to Alvarion's success in this competitive and early-stage market has been its willingness to partner with other global telecommunications suppliers such as Alcatel-Lucent (NYSE: ALU  ) and Nokia (NYSE: NOK  ) Siemens Networks to distribute private-label versions of its products for WiMAX networks. System integrators IBM (NYSE: IBM  ) and Hewlett-Packard (NYSE: HPQ  ) also resell Alvarion solutions. While selling products on an OEM basis generally yields lower margins, it has given Alvarion a strong toehold in a young market that helps it ride out volatility.

Alvarion also bucked the trend of reduced outlook that many other companies are forecasting -- the company expects next quarter to produce $67 million to $71 million in revenue, thanks to strong bookings and significant new deals. Though GAAP losses are still foreseen, Alvarion is in a strong position in a developing market. With no debt, $148 million in the bank, and shares trading at only 1.8 times revenue, Alvarion is still worth a good look at today's prices.

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Alvarion's prospects and track record helped the company make the cut as a recommendation at theMotley Fool Rule Breakers service. To see all the stocks that have the service beating the market by 9 points on average, take a free 30-day trial today.

Fool contributor Dave Mock doesn't function well without his daily Twinkie. He owns shares of Alcatel-Lucent and is the author ofThe Qualcomm Equation. Sprint Nextel is an Inside Value recommendation. The Fool has a disclosure policy, and it would be pleased to make your acquaintance.


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