Alvarion: We want our money back from Nortel

Alvaro CEO Tzvika Friedman is lashing out at bankrupt Nortel, which ended its WiMAX partnership with Alvarion and severely impacted the WiMAX vendor's fourth-quarter results.

During an interview with telecoms.com, Friedman accused Nortel of exploiting Chapter 11 bankruptcy rules to avoid paying Alvarion money the company is owed. Friedman vowed to reclaim all of that money.

Nortel's bankruptcy impacted Alvarion's fourth-quarter results as the WiMAX vendor reported a net loss of $4.8 million, or 8 cents per share, on revenues of $70.1 million. When Nortel filed for bankruptcy in January, Alvarion was forced to write off $2.4 million in lost equipment sales. The Israeli vendor had shipped the WiMAX equipment to Nortel as part of their partnership, but Nortel's Chapter 11 move now means that Alvarion will have to fight for what it is owed.

"I am very unhappy with the way Nortel behaved with the bankruptcy," Friedman told telecoms.com. "They owe me money, and they are not paying it. They are hiding behind bankruptcy rules. We intend to get this money any way we can," he said.

"Very simply, we shipped to [Nortel] and they shipped to customers and collected the money. They can pay the money. It is not as if someone owes them and they owe us. They are using the Chapter 11 bankruptcy [rules] to their maximum advantage. Naturally, that is something I don't like," he said.

Friedman also believes a case can be made for getting back more than $10 million from Nortel related to break up of Alvarion's WiMAX partnership with the vendor. As part of this agreement, Nortel was to provide Alvarion with substantial funding for WiMAX development during 2009. That money, of course, is gone.

"In December 2008 we announced cuts that would give us about $15 million of savings [in 2009], most of which were taken from opex and some of it from the COQ [the cost of equipment]," he said. "The Nortel funding [for 2009] is about the equivalent of all the opex savings, so we needed to make those savings again because not having [the Nortel] money could take Alvarion into losses. The only way to deal with this immediately was to cut salaries by 10 percent [excluding the lower paid] to fill most of the hole left by Nortel."

For more:
- see telecoms.com [1]

Related articles:
Nortel's bankruptcy impacts Alvarion financial results [2]
Alvarion to cut jobs [3], costs amid uncertain 2009
Nortel exits [4] mobile WiMAX business
Nortel shifts its focus from WiMAX to LTE [5]