Ceragon Again, Off Again

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

There were no surprises in the earnings released by Motley Fool Hidden Gems recommendation Ceragon Networks (Nasdaq: CRNT  ) yesterday -- the wireless solution provider already deflated market expectations a few weeks back with an early preview of its earnings that included stable revenue, but less than expected on the bottom line.

Revenues grew nearly 31% over last year to $58.1 million for the quarter. But more than 43% of this came from OEM customers of Ceragon, which brought gross margins down to 31.5%, well below the 35.9% level maintained in the same quarter last year.

Ceragon's biggest OEM customer, the Nokia (NYSE: NOK  ) and Siemens network partnership, had another very active quarter and accounted for more than 10% of revenues. But Ceragon expects the mix of OEM business to dip back down to normal levels in the coming quarters, bringing gross margins back up to the mid-30s.

Though CEO Ira Palti reiterated that he sees no customers curtailing spending or delaying orders yet, he is taking a cautious stance toward the future, dialing back growth expectations for 2009 to a wider range of 10% to 20%. Management also acknowledged that it will take longer to hit its goal of a 10% operating margin, now not likely to happen until the second half of 2009. One area of increased optimism, though, was in the self-perceived value of Ceragon's stock -- the company announced a $20 million share repurchase plan right along with earnings.

What is interesting, though, is that on the conference call, analysts peppered Ceragon management with what seemed like more questions about the state of the wireless broadband market in various regions than about Ceragon itself. They probed for hints about the progress in the disruptive WiMAX partnership cooked up between Sprint Nextel (NYSE: S  ) , Clearwire, Intel (Nasdaq: INTC  ) , and Google (Nasdaq: GOOG  ) , as well as for indications of whether operators in the U.S. like AT&T (NYSE: T  ) and Verizon (NYSE: VZ  ) and others around the world are delaying upgrades for capacity to their networks.

While analysts like to do this to scoop up details on other companies' operations, it's also evidence that Ceragon commands an important position in the global industry. While it's certainly going to take a while for this growth story to play out, the company holds a privileged position that should pay off down the line.

For more Foolish insight:

Ceragon Networks was selected by the Motley Fool Hidden Gems team for its exceptional management and great prospects. Check out the details, and see what other stocks Tom Gardner and Bill Mann think will beat the market with a free 30-day trial.

Fool contributor Dave Mock owns shares of Intel in a direct investment account. Sprint Nextel, Nokia, and Intel are Inside Value selections. Google is a Rule Breakers pick. The Fool's disclosure policy recommends you get your daily intake of essential vitamins and minerals.

Read/Post Comments (0) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 764248, ~/Articles/ArticleHandler.aspx, 10/25/2016 3:44:16 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,181.19 -41.84 -0.23%
S&P 500 2,143.83 -7.50 -0.35%
NASD 5,282.58 -27.25 -0.51%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/25/2016 3:28 PM
CRNT $2.69 Down -0.13 -4.61%
Ceragon Networks CAPS Rating: ***
GOOGL $828.82 Down -6.92 -0.83%
Alphabet (A shares… CAPS Rating: *****
INTC $35.07 Down -0.20 -0.55%
Intel CAPS Rating: ****
NOK $4.98 Up +0.01 +0.10%
Nokia CAPS Rating: **
S $6.48 Down -0.44 -6.36%
Sprint CAPS Rating: **
T $36.81 Down -0.06 -0.15%
AT and T CAPS Rating: ****
VZ $47.91 Down -0.30 -0.63%
Verizon Communicat… CAPS Rating: ****