This Stock Will Hurt You

I hate it when I'm right.

Eight months ago, I profiled a top-performing CAPS investor with a yen for WiMax networking installer Alvarion (Nasdaq: ALVR  ) . Though that winning investor liked Alvarion's turnaround story in the making, I came to the opposite conclusion based on how things were going for WiMax operator Clearwire (Nasdaq: CLWR  ) -- not well -- and how the LTE competition was shaping up (swimmingly).

Alvarion reported fourth-quarter earnings this week and proved my negative thesis to a fault.

The company saw sales dropping 7% sequentially and 16% year-over-year on dramatically lower unit volumes. Demand for Alvarion's products and services just isn't there. At the same time, the company has reorganized itself to sell less physical product and more consulting services, a transition that isn't doing wonders for a cash-strapped company that might be better off cutting costs rather than hiring new consulting personnel.

Alvarion even took a $57 million goodwill charge this quarter, erasing every last penny of goodwill balance from the balance sheet, most of which came from the 2004 acquisition of interWAVE that created Alvarion's cellular mobile unit.

In other words, the push into mobile WiMax operations turned out to add no value to the company in the long run. That's too bad because it has become central to Alvarion's business. This is not the kind of message you want to send to investors, and the goodwill write-off alone would be reason enough to stay away from this stock.

If you want to invest in next-generation wireless networking, you're better off with LTE leaders Alcatel-Lucent (NYSE: ALU  ) and LM Ericsson Telephone (Nasdaq: ERIC  ) , both of which are trading close to 52-week highs these days on the strength of their 4G network equipment. On a more fundamental level, backhaul equipment builder DragonWave (Nasdaq: DRWI  ) looks like a surefire winner in the 4G space with an unmatched value profile.

Stay away from Alvarion, dear Fool. You can do so much better.