Alvarion: Sentiment Progressively More Positive, And With Good Reason

It's very easy to prove the change that has taken place in the attitude of investors to Alvarion Ltd. (ALVR). The best proof of all is the sharp change in what the analysts covering the company have to say, and in postings on various blogs. I have been following these events closely, and I believe that the change for the better is quite radical. One could say that we have gone from a consensus that Alvarion was a company in decline to one that it is making a breakthrough. The sales and earnings per shares consensus estimates for 2007-2008 just keep rising, as more and more analysts up their forecasts.

I know of two analysts who expect Alvarion's earnings per share to exceed $0.80; one of them predicts earnings per share of $0.92 for 2008. The company's stock price has climbed following these forecasts, since if the analyst who expects $0.92 per share is right, then the stock is currently trading at a multiple of around 9 for 2008, which is fairly low. Last week, for example, it rose largely on the back of the Chinese story with Intel Corporation (INTC); it turns out that Intel will unveil in China mobile systems based on Alvarion's technology.

The question that was always asked previously was why Alvarion never appeared in any deal with Intel. People wondered, "If Intel is making so strong an entry into WiMAX chip production, why is Alvarion, its veteran partner in Israel, inconspicuous?" Alvarion's president and CEO Tzvika Friedman repeatedly claimed that everything was in order and nobody believed him, but the belief is now there again. It has happened, not because of Intel and the exhibition in China, but largely because WiMAX is now starting another northward round on Wall Street. Very few people understand the telecommunications world well enough to know whether or not WiMAX will catch on. In the past, for example, they convinced me that WiMAX would replace WiFi and now they're telling me that the two technologies actually complement each other.

ALVR 1-yr chart:

Published originally by Globes [online], Israel business news - www.globes.co.il
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006. Republished on Seeking Alpha with full permission.