Shares went flying on the news, with the trading volume of the Israeli company more than doubling its 30-day moving average. When the frenzy finally subsided, the stock had been pummeled, closing down more than 13% on the day.
Investors are in a less punishing mood today, with shares trading flat in late-afternoon action. Still, Alvarion has shed roughly 35% of its value on a year-to-date basis, and its second-quarter report provides further fuel for a bearish outlook on the firm.
Among other things, the company -- which also anticipates a third-quarter loss -- pinned its performance on lower sales to a major customer and delayed orders in its non-WiMAX products lines. Both are troubling developments, but if I had to pick the worse, I'd go with the latter.
After all, as my Fool colleague W.D. Crotty suggests, a bigger player such as Cisco Systems
Alvarion, whose market cap is under half a billion dollars, is also a member of the club. But with such sizable competitors, the company's non-WiMAX revenue streams are an important part of its investment thesis. One quarter does not a thesis sink, of course, but if those streams are drying up, investors may continue flooding Alvarion's exits.
Trickle down to further Foolishness:
Shannon Zimmerman runs point on the Motley Fool Champion Funds newsletter and wishes his neighborhood had WiMAX. Shannon doesn't own any of the securities mentioned above. You can check out the Fool's disclosure policy by clicking right here.