Before the market opens on Wednesday, wireless broadband equipment provider Alvarion (Nasdaq: ALVR) will issue its fourth-quarter earnings. Here's a rundown of what to expect.

What analysts say:

  • Buy, sell, or waffle? A dozen analysts follow Alvarion; eight give the stock a buy rating, while four recommend holding. The stock earns high marks in our Motley Fool CAPS investor database, with a five-star rank from the 476 users (out of a total 83,000) who've rated the stock.
  • Revenue. On average, analysts are looking for 25% more revenue compared to last year, or $63 million for the quarter.
  • Earnings. The company is expected to deliver $0.04 per share in income for the quarter.

What management says:
Alvarion closed 2007 on a high note, suggesting that it's seeing strong momentum in the WiMAX market. The company also closed out the year with another key contract, with CEO Tzvika Friedman stating that "We are gratified to conclude the year with a major competitive win in which we were selected as the global WiMAX supplier to a Tier 1 operator." With strong global distribution partners such as IBM (NYSE: IBM), Alcatel-Lucent (NYSE: ALU) and Siemens (NYSE: SI), Alvarion now claims that its WiMAX solutions are the most widely deployed in the industry.

What management does:
Alvarion has been able to report net earnings in the past two quarters, thanks to earnings from discontinued operations. Still, operating losses remain, though the trend in margins is improving there.

Margins

06/06

09/06

12/06

03/07

06/07

09/07

Gross

50.4%

51.1%

55.7%

55.7%

55.5%

54.8%

Operating

(6.3%)

(4.5%)

0.6%

(0.2%)

(0.1%)

0.5%

Net

(22.1%)

(19.3%)

(22.4%)

(19.2%)

(4.3%)

(2.8%)

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
It's still early in the WiMAX game, and top-tier network operators have not yet fully moved on deployment plans for next-generation broadband solutions. This leaves plenty of volatility ahead for Alvarion, as competitors such as Nortel (NYSE: NT) attempt to assert dominance in the global market. Also, news such as a WiMAX collaboration gone bad between Sprint Nextel (NYSE: S) and Clearwire (Nasdaq: CLWR) -- and rumors that the busted deal is back on again -- will continue to affect the company.

To remain a viable competitor in a sea of giants a hundred times its size, Alvarion needs to show continued improvements in margins as it increases its scale. As the market for WiMAX equipment becomes more competitive however, cost pressures will push against this, so it will be interesting to see how Alvarion fared financially in 2007.

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Fool contributor Dave Mock hits the "snooze" button three times on average each morning. He owns shares of Alcatel-Lucent. Dave is the author of The Qualcomm Equation. The Fool's disclosure policy is written on stone tablets and kept in an Ark.