Nortel drops out of WiMAX business

Fallout from Nortel Network Corp.’s financial troubles has forced the Canadian giant to end its mobile WiMAX business and sever its ties with Alvarion Ltd.
Nortel officials said Thursday the decision allows the company to narrow its focus, manage investments and strengthen its long-term competitiveness in its carrier business by dropping out of the 4G technology that is being heavily backed by Alvarion.
Alvarion officials said they are examining the impact Nortel’s decision will have on its operations and expect to have some answers when its reports its fourth-quarter results Wednesday.
“We are obviously disappointed in the direction this has taken,” Tzvika Friedman, Alvarion CEO and president, said in a statement.
Nortel missed out on a crucial WiMAX contract when it was not chosen by Sprint Nextel Corp. for its WiMAX rollout. Nortel also has dropped its W-CDMA business line but is continuing with its LTE roadmap and is in trials to test LTE with Verizon Wireless.
At the start of the year, Nortel filed for bankruptcy. The company has been saddled with quarterly losses and has been trying to cut costs and preserve cash.
“This action, while difficult, was a necessary step addressing Nortel’s current situation and intention to narrow the company’s focus,” Richard Lowe, Nortel president of carrier networks, said in a statement.
Lowe said Nortel will work closely with Alvarion to transfer its existing WiMAX customers.
Last June, the companies agreed to work together by integrating Alvarion’s advanced radio access network technology with Nortel’s core network solution. Nortel also sold Alvarion’s WiMAX products under the deal.
Friedman said Alvarion’s position is strong in the WiMAX market. For the fourth quarter, the company had WiMAX shipments of $54.4 million and revenues of $42.3 million from the technology.
Alvarion officials said the company will not be able to recognize $2.4 million in revenues from the sale of products to Nortel during the fourth quarter.
“Our priority is to minimize the effect of Nortel’s decision on our joint customers,” Friedman said.