Knobias Clip Report (07-21-2008) CRNT
Submitted By Knobias ClipReport
CRNT: Management Discusses Increased Q2 Revenues and Raises FY08 Guidance
By Fain Hughes, fhughes@knobias.com
Shares of Ceragon Networks Ltd. (CRNT) were higher on Monday after the Company reported results for the second quarter which ended June 30, 2008. Revenues for the second quarter of 2008 were $55.2 million, up 47.9% from $37.3 million for the second quarter of 2007 and 17% from $47.2 million in the first quarter of 2008. Non-GAAP net income was $0.13 per diluted share, compared to net income of $0.12 per diluted share for the same period in 2007. Cash and cash investments at the end of the quarter were $108 million.
Mr. Ira Palti, President and CEO of Ceragon, explained in a conference call today, “We flew past the top-end of our target range in Q2, reaching al all-time record of $55 million. Bookings remained very strong. We continue to benefit from the growing worldwide demand for high-capacity technology, and we are seeing a global migration earlier than expected.”
“North America continues to be the only weak spot. We believe that this will continue to be weak for the balance of 2008. In 2009, we expect improvements from the growth in data usage from the iPhone launch and similar devices. Furthermore, once the merger of Sprint and Clearwire receive regulatory clearances, this could provide a boost to demand next year.”
Mr. Palti added, “With strong demand on a global basis, execution remains the critical success factor. We continue to emphasize technological innovation, as well as product cost production with stringent expense control.”
The CFO of Ceragon, Mr. Tali Idan, commented, “The Asia-Pacific region continued to grow rapidly, accounting for 57% of total revenue for the quarter. India accounted for 22% of revenue and Latin America increased to 15%. North America accounted for the remaining 6%. We had two 10% customers, with one accounting for almost 37% of total revenue.”
“Our gross margin in Q2 was 34%. Our operating margin was 7.8%, reflecting the lower gross margin. We expect our gross margin to return to the 35%-36% range in Q4 and beyond.”
Mr. Idan added, “If the dollar remains at current levels, it will have a negative impact of $600,000 in each of Q3 and Q4. We are not hedged for this impact, but we are looking for ways to mitigate the impact. If we see no improvement in the dollar, it will be quite challenging to reach our goal of 10% operating margin by the end of the year.”
He concluded, “We continue to have a backlog that is more than one quarter ahead. We expect Q3 revenues to be in the range of $56 million-$60 million. For FY08, we are raising our revenue growth target to 35%+ over last year’s revenues.”
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