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Two words I never want to hear in connection with the stocks I own:
OK, go ahead and add "slower growth" in there, too. Thankfully, Motley Fool Rule Breakers recommendation Alvarion (Nasdaq: ALVR ) isn't seeing any of that. But management has been (gulp) accused of that other word.
Last week, former finance manager Ory Pinco filed a lawsuit in Israeli labor court asking for 500,000 shekels (the equivalent of $138,000) in damages, news agency HAARETZ reports. Pinco claims that she was fired after three months on the job for no reason, part of a revolving-door policy "meant to cover up senior executives' poor performance and lack of responsibility for financial matters, which include managerial corruption and fraud," according to her lawsuit.
Those are serious accusations, made more dangerous when you think of how risky Alvarion's core business is. Peer Clearwire (Nasdaq: CLWR ) is bleeding money, for example. And while media and computing giants such as Comcast (Nasdaq: CMCSA ) , Time Warner Cable (NYSE: TWC ) , Intel (Nasdaq: INTC ) , and Google (Nasdaq: GOOG ) all have a vested interest in WiMAX's success, AT&T (NYSE: T ) and peers are hard at work developing an alternative known as LTE.
All that said, I see no evidence of financial shenanigans in Alvarion's filings. My most worrisome finds:
- CEO Tzvika Friedman gave up his seat on Alvarion's board as of Aug. 15 because of "the challenges of dealing with the disparity between the requirements of Israeli law and the voting practices in the United States, where most of the company’s shares are held," whatever that means.
- Alvarion fronts automotive lease payments for its executives; $2.8 million worth last year, up from $2.3 million in 2006 and $2.2 million the year before that. I'm not thrilled to see auto lease expenses equal 1% of revenue.
And yet even this feels like nitpicking. Alvarion is still producing outsized revenue growth, and a planned $30 million share buyback should add value to existing shareholders.
Fraud, Ms. Pinco? Let's see the evidence. Till then, I'm not selling.
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