TEL AVIV, Israel, October 16, 2008 - Ceragon Networks Ltd. (NASDAQ and
TASE: CRNT), a leading provider of high-capacity Ethernet and TDM wireless backhaul
solutions, today announced preliminary financial results for the third quarter ended September
30, 2008.
Ceragon expects revenues for the third quarter of 2008 to be approximately $58
million, an increase of about 30% from Q3 of 2007 and in-line with the company’s previous
guidance.
Gross margin is expected to dip to approximately 31% to 32% in Q3, primarily as a
result of a spike in OEM-related revenues to about 43% of total revenues, compared with
31% of total revenues in Q2, as well as a less favorable geographic mix. Gross margin was
36% and 34% in Q3 of 2007 and Q2 of 2008, respectively.
As a result of the lower than expected gross margin in Q3, GAAP net income is
expected to be approximately $3.2 to $3.6 million, or $0.08 to $0.09 per diluted share,
compared with $3.7 million, or $0.11 per diluted share in Q3 of 2007. On a non-GAAP basis,
net income for Q3 is expected to be approximately $3.9 million to $4.3 million, or $0.10 to
$0.11 per diluted share, compared with $4.1 million, or $0.13 per diluted share, in Q3 of
2007. The Company did not give specific EPS guidance for the third quarter; however, the
preliminary results are below the range of analysts’ estimates according to First Call.
“The Asia Pacific region continued to lead our growth during Q3,” said Ira Palti,
President and CEO of Ceragon. “As we expected, the EMEA region returned to more typical
revenue levels in Q3 after a temporary dip in Q2, and we were pleased to see modest
sequential growth in North America. We are particularly gratified by the strong reception our
cost reduced next generation platform of radios is receiving in the market, and revenues from
these new products began to ramp quickly in Q3. We held operating expenses to about the
same level as Q2, but the mix-related dip in gross margin caused our net income to come in
below expectations. We believe the combination of a return to more direct business and a
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more favorable geographic mix, together with an improving product mix will result in gross
margin returning to the mid-30’s.”
“Our book-to-bill ratio of one in Q3 indicates healthy demand continues and we are
targeting 35% growth in 2008 over 2007, but tempering our expectations for exceeding that
target due to the level of global economic uncertainty. Meanwhile, the feedback from the field
remains uniformly encouraging.”
A conference call discussing Ceragon’s preliminary results for the third quarter of
2008, will take place today, October 16, 2008, at 9:00 a.m. (EDT). Investors can join the
Company’s teleconference by calling (800) 288-8967 or international (612) 332-0720 at 8:45
a.m. EDT.
Investors are also invited to listen to the call live via the Internet by accessing
Ceragon Networks’ website at the investors’ page: https://www.ceragon.com/investors/events
selecting the webcast link, and following the registration instructions.
If you are unable to join us live, the replay numbers are: (800) 475-6701 or
international (320) 365-3844, Access code 965971
.
A replay of both the call and the webcast will be available through November 16,
2008.
