Sprint Nextel/Clearwire Deal Should Fire Up Alvarion, Airspan

Sprint Nextel (NYSE:S) and Clearwire (NASDAQ:CLWR) said they plan to jointly construct a nationwide mobile broadband network in the United States using WiMAX technology. Sprint Nextel expects to commence the initial stage of its mobile WiMAX network deployments by year-end 2007 and both companies expect to launch commercial service in the first half of 2008.

Notablecalls: This news is going to put fire under the WiMAX equipment makers such as Alvarion (NASDAQ:ALVR) and Airspan (NASDAQ:AIRN). In FY06, Airspan was the second largest supplier of WiMAX equipment, behind Alvarion, with an estimated market share in excess of 26%. The WiMAX market is expected to experience significant growth over the next several years. Sky Light Research estimates that the total market for WiMAX products in FY06 was $158mm. However, Gartner projects that the market for WiMAX equipment will increase to $6.2bn by 2011. Airspan has projected that its WiMAX revenues in FY07 will advance by 80% YoY to $75mm. WiMAX now accounts for 55% of the company's revenues.

Do note that Alvarion has not yet been named as a domestic supplier to either Sprint or Clearwire. Alvarion does supply products to the international subsidiaries of Clearwire and hopes to eventually win business with Sprint. Motorola is the principal domestic supplier to Clearwire. So there is not going to be any immediate impact on ALVR's results.

Playing ALVR and AIRN from my perch would look like this: Buy up to +4%-5% but short above the +10-15% level.

ALVR and AIRN 1-yr chart: