Aaron Katsman
www.IsraelNewsletter.com

News that Time Warner Cable (TWC) and Comcast (CMCSA) are discussing a plan to provide funding for a national wireless network using WiMax technology, has sent shares of the IsraeliCeragon (CRNT) surging higher. According to the report, “Sprint (S) and Clearwire (CLWR) have been working for months to cooperate on a WiMax rollout and are now trying to raise at least $3 billion for a joint venture, the report said. Under the plan the parties are reviewing, Comcast would put as much as $1 billion into the venture, with No. 2 operator Time Warner Cable adding $500 million.

Why is this such good news for Ceragon? Because Ceragon, the leading provider of wireless backhaul solutions for IP-centric networks,  has been rumoured to be a big winner if Sprint were to go ahead and build out the WiMax network. Ceragon stock has gotten crushed over the last few months, as Sprint bailed on their deal with Clearwire. The fact that we are again talking about a nationwide U.S. WiMax network, is great news for Ceragon.

For investors, if we hear some more good news from the company coming on the heels of this report, it could potentially send Ceragon stock back to the highs made last year. It’s important to note that this is not a stock for the weak of heart, but for volatility lovers, this may be a company to take a look at. 

Disclosure: Author’s fund holds a position in CRNT. He holds no position in any other stock mentioned as of 3/26/08.

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NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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Not wanting to be remiss in giving an update on Israel Opportunity Investor portfolio member, Alvarion (Nasdaq: ALVR), we want to chime in with our two cents. We’ve been positive on the stock and have seen our thesis — that of further global uptake of fixed mobile services — came to fruition and even surpass what we were expecting. This is a critical lesson for investors: while stocks may perform financially as planned, how they trade is another matter.

We’ve seen the stock essentially pulverized by fear of weak global markets. Telecom spending typically gets pushed out during turbulent times.

That said, Alvarion’s not seeing that yet. In fact, while we continue to think the stock has a lot going for it, we are sensing a rising sense of negativity on the stock, driving it down off of what was ultimately a good reporting season and not too bad guidance in the headwinds of a weak dollar.

An article ran in SmallCapInvestor last week after Alvarion announced earnings and looked at how analysts were sizing up ALVR’s results. The way I read the results and how Susquehanna addressed them?

• Alvarion had a Q4 ahead of estimates and saw WiMAX revenues up over 50% from 2006.
• Higher operating expenses are certainly a negative for the company but the company attributed this to a weak US dollar.

What many investors and even analysts don’t appreciate is that the dollar has fallen like a rock versus the Israeli shekel. Israeli firms like Alvarion that trade in the US and are priced in dollars but conduct R&D/production in Israel are all feeling a squeeze. We’ve heard this from numerous Israeli CEOs. When the time comes that the dollar ultimately strengthens against the shekel, we’ll see a natural reversal in these numbers. My point here is that when numbers like this are clearly attributed to fluctuations in the dollar, earnings gains/misses are not organic changes in the business model.

This same analyst report that SmallCapInvestor disparaged actually comes out pretty positive on Alvarion. Susquehanna likes the Q4 surprise, likes the WiMAX opportunity, and Alvarion’s stable of international customers. Long term investors in Israeli stocks trading in the US will find it somewhat funny to think that a particularly strong shekel is weighing on earnings.

Disclosure: Author’s fund holds a position in ALVR and is long the stock as of 2/8/08.

Please see our Disclaimer HERE.

NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.

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Aaron Katsman
www.IsraelNewsletter.com

As my buddy Zack“Facebook” Miller posted exactly 2 weeks ago, Alvarion(ALVR) today announceda huge win, inking a deal with a “Tier-1″ player. That player is expected to be France Telecom and the deal is estimated to be in the $20 million range. Here at IOI we continue to be positive about the technology and the 2 major Israeli players, Alvarion and Ceragon Networks(CRNT).

You just have to love these little Israeli companies and their innovation. Just when you think the end is near, Bang, they sign a major deal. 

With the recent weakness in both stocks, these 2 could be big winners in ‘08.

Disclosure: Author’s fund holds a position in ALVR and is long the stock as of 12/19/07.

Please see our Disclaimer HERE.

NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter.  Stay ahead of the game and make smart decisions in Israel stocks.  Go here to learn more.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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I know the market is tanking but Ceragon Networks (Nasdaq: CRNT) took a right across the jaw yesterday, falling almost 15% on seemingly no real news. We’ve written before about Ceragon, a rising player in fixed wireless and WiMAX.

Expectations for Cergaon were tempered in the 3rd quarter when Sprint (NYSE: S) called a time-out for its large WiMAX network rollout plans in the US. Many investors had bet that Ceragon would be the beneficiary of such business. In the wake of news about recession and the future for WiMAX, investors who had bid up Cergaon 300% or so this year are clearly selling. We’ve had a large pullback, but the stock is still up 80% for 2007.

Profit taking? Certainly I’d be locking in some gains as 2007 limps to an end. Combined with a general bad market, concern about telecom equipment spending slowing down, and talk of an Israeli analyst saying something negative on the company, investors are certainly skittish.

How much of this is macro vs micro? Hard to say, but we’re definitely of the opinion that WiMAX isn’t only going to happen – it is happening, outside the US. Alvarion (Nasdaq: ALVR), another Israeli fixed wireless player, has also taken its bruising (read what we’ve had to say about them here), but both companies continue to roll in new deals in emerging markets where there isn’t necessarily a better platform than WiMAX. These tests will eventually translate into larger project bookings.

NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.

Disclosure: Author’s fund has a position in ALVR as of 12/18/07.

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