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Ladies and gentlemen, thank you for standing by. Welcome to the Alvarion First Quarter Earnings Release Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session instructions will be given at that time. (Operator Instructions), as a reminder this conference is being recorded. I would now like to turn the conference over to your host Director of Investor Relations Ms. Esther Loewy. Please go ahead.

Thank you operator, good morning everyone. Welcome to Alvarion's First Quarter Conference Call. Together on the line with me today are Tzvika Friedman our CEO, and Efrat Makov, our new CFO. The earnings release was issued this morning and is now available on all major news feeds. Matters discussed in this conference call may contain forward-looking statements within the meaning of the Safe Harbor provision and the Private Securities Litigation Reform Act. These statements are based on the current expectations or beliefs of Alvarion's management and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The following factors among others could cause actual results to differ materially from those described in those forward-looking statements. Failure of the market for WiMAX products to develop as anticipated. Alvarion's inability to capture market share and the expected growth to WiMAX market as anticipated due to, among other things, competitive reasons or failure to execute in our sales, marketing or manufacturing objectives. Inability to further identify, develop and achieve success for new products, services and technologies, increased competition and its effect on pricing, spending, third-party relationships and revenues, as well as the inability to establish and maintain relationships with commerce, advertising, marketing, and technology providers, as well as other risks detailed from time-to-time in the company's annual report of Form 20-F, as well as in other filings with the Securities and Exchange Commission. I would now like to turn the call over to our CEO, Tzvika Friedman. Tzvika, please go ahead.

Good morning everyone. I am pleased to welcome Efrat Makov to the company and to wish a success and enjoyment with Alvarion. You will be hearing from her in a moment. I would also like to take this opportunity to thank Dafna Gruber who has been an important asset to Alvarion for a long time. We appreciate her many contributions, including all the efforts she has made recently to help us to complete this quarter and make a smooth, effective transition. We wish her all the best. We began 2007 with an excellent first quarter. Revenues grew sequentially even though Q1 is typically affected by seasonal weakness. This top-line strength allows us to continue to invest in our Open WiMAX initiatives and still remain cash flow positive and profitable on a non-GAAP, meeting our objective of balancing the need for investment with a need to remain profitable. Looking especially at WiMAX progress, our BreezeMAX revenues continue to grow reaching $25 million in Q1. This is a major improvement from about $40 million we reported in the same quarter last year, measured by shipment, our WiMAX growth being even stronger. BreezeMAX shipments reached $33 million, a significant jump from the last several quarters, indicating that the growth drivers we have described are indeed happening and that we are executing on our plan. For example, during Q1, we shipped our 802.16e platform to more than 20 different operators. 14 are well ahead of other vendors with their availability of the solution that operators want. With everyone so preoccupied with mobile WiMAX there is perhaps a tendency to overlook the effect that we are experiencing strong growth and solid profitability from our primary broadband access business in emerging market and rural areas of developed countries. This wireless DSL market is and will continue to be an important growing market for us, in addition to Personal Broadband. Both primary and Personal Broadband application will continue to be important strategic market and we will serve both with our evolving 802.16e platform. As we have indicated in the past market drivers such as increased availability of license spectrum standard-based solution and lower co-subscriber unit are driving growth very much in line with our expectation. More important, we have the right product for the market and our team is doing a good job of execution, winning our share of deals with new innovative challenges and large operators. Strong growth and large opportunities always attract competition. And we are beginning to see the major vendor joining our traditional competition in competing for primary broadband applications. We are pleased to say that we have been dealing with increased competition quite successfully and based on the latest information available we have slightly increased our market share. As more licenses are awarded and operators move out off the trial stage into full deployment, we are seeing order size increasing. This is beginning to show up in revenue as well. In Q1 we had 10 customers accounting for over $1 million in revenue each. Looking at the increased momentum in terms of where we are shipping, the strongest regions continue to be emerging markets. Netia in Poland and the Pan-European cell operator deploying in Romania continue to grow and place additional orders. In addition, several Russian operators such as Enforta, Megafon and Golden Telecom continue to expand their networks. Meanwhile, we are shipping to new customers in Romania, Latvia, Lithuania, Slovakia, and the Czech Republic, as well as other countries in the region. In Africa, we continue to ensure we pick business from Telkom South Africa, Telecom Namibia, Kenya Data Networks, MPN a Pan-African cellular operator and more. There is a tendency to discount markets like Africa as being small. But you maybe interested to know that we shipped over $1 million of equipment to at least two customers in Africa in Q1. In Western Europe, we continue to grow along with our customers. In Q1 we continued shipping to Megabeam in Italy, Daimler and Finnet in Finland, Aircom in Ireland, Altitude in France and Iberbanda in Spain. There is understandable focus these days on our ability to lend so called big projects with Tier 1 operators. Our success in Spain illustrates how some projects tend to be discounted by investors just because they start off relatively small or the operator is less famous. How does this sound? A $20 million - $25 million project over two-three years for 70 cities with a Tier 1 operator like Telefonica. This is exactly what we have already achieved via our close work with Iberbanda, now a subsidiary of Telefonica. And we believe we will continue to supply them as they continue their growth. It is a prime example of the success of our strategy of fusing our time to market advantage and highly scalable solution to cultivate close relationships from a very early stage helping our customer become successful then growing along with them. We believe this partner will be repeated many times over. This quarter we also saw improving momentum from both Latin America and North America. In Q1 we ship to customers, Nextel in Peru and Telefonica Cellular in Paraguay. In Costa Rica we are beginning to ship to our local partner [Coasin] as the deployment begins on RASCA project a well published nationwide rollout of WiMAX services by incumbent operator ICE in which we are participating. Repeat customers in Latin America included Airtouch in Argentina Americatel in Peru. We are continuing to ship to Telmex in Mexico and Peru and we also shipped a large order to Telmex Chile, supplied partially through Alcatel-Lucent. In North America also we're gaining traction. We have reorganized our distributors and have strengthened our channel relationships. We are beginning to see order size growing in the U.S. as well, as evidenced by the fact that we shipped over $1 million to three U.S. customers in Q1. Another exciting piece of news is that we have formalized the relationships with EarthLink for our backhaul solution as part of a municipal Wi-Fi deployment around the country. This is especially gratifying because we took this business away from a much larger competitor. We also continue to grow along with our customers such as Alltel and Digital Bridge. Turning to our second strategic market, we believe that the indicators remained positive for the development of the personal broadband market. And we are continuing to meet important milestone according to our plan. We are aware that investors are particularly interested in these indicators and milestones as a way to gauge progress until mobile revenues starts to show up in 2008. Starting with the macro indicators, the world wide demand for true personal broadband continues to grow. For example, in a recent survey that asked Americans how they use or plan to use broadband services, 64% of parents said that they would subscribe to mobile TV in their cars to entertain their kids. Clearly pricing has a lot to do with demand and we are seeing the all-you-can-eat flat-rate internet pricing model continue to take over in mobile data. Recently the Verizon Wireless announced that they are moving to a flat rate for data in their rate plans, which includes unlimited text, picture, video and instant messaging to user on any network. Anyone who has teenagers knows what this move will do to the usage. During Q1 we achieved an important milestone toward this type of anywhere networks. At CTIA in March, we partnered with NDS and MobiTV to showcase mobile WiMAX TV services. Personal broadband adoption will also depend heavily on the availability of low cost consumer electronic devices. Several major handsets vendors have committed to WiMAX. For example, Nokia has announced availability of WiMAX handsets in 2008. Intel says we can expect see WiMAX built into devices such as digital cameras, music players and handheld game consoles in addition to the mobile PC sometime in 2009. To help ensure that the market has an opportunity to develop in its early stage, we will have a PC card available from our Exxon joint venture by the middle of this year. Meanwhile, we believe we are the only vendor shipping a commercial e-platform. And our 4Motion solution has already achieved initial interoperability with numerous devices using embedded chipsets for vendors such as Beceem, Runcom, Sequans, GCT and Intel in preparation for Wave 1 and Wave 2 certification of 802.16e standard. Intel Developer Forum in Beijing a couple a weeks ago featured the first live demo of MIMO Matrix B, an essential element in the Wave 2 system compliance. Due to the close ongoing relationship with Intel and the advanced state of our radio access network, we were the first to demonstrate this technology, with the new Intel chip embedded into an ultra-light laptop prototype. The purpose of this technology, MIMO is to increase the throughput and capacity of a WiMAX network to support high-speed services such as video and online gaming. This new Intel chip will be in the next generation of their Centrino platform in 2008. Recently, Intel announced that it will not include 3G technology in the Centrino platform and will focus on WiMAX. We are continuing to work closely with Intel on interoperability testing of their chip with our infrastructure in order to assure our customer that we are very advanced in supporting the entire WiMAX enabled notebook due out in 2008. Intel has said it expects WiMAX to follow the same pattern as Wi-Fi. Intel noted that when they launched Centrino in 2003, the attach rate of Wi-Fi was 15% it is now more than 95%. Additional milestones that affect both primary and personal broadband to watch for are the upcoming spectrum allocation later this year in Japan, Taiwan, India, Brazil and Italy. Some of the spectrum has been allocated as part of the government's personal initiative to encourage broadband. For example as part of the M-Taiwan initiative the government plans to award 3 -6 year WiMAX licenses for each of the Northern and Southern regions of Taiwan and at least one in ten-year Ireland wide license two years later. While several other vendors are struggling to bring the first WiMAX product to the market we have already shipped about 150 million WiMAX solutions. While others brag about a handful of the deployment in trials we ended this quarter with 150 commercial deployments and 220 active trials and our customers are generating revenue for WiMAX services. While others concentrate their resources of winning one or two highly visibility deals, our strategy is to build an echo system of strategic partners and as many strong customer relations as possible in the markets we target. Some of them already have a potential to be the large project all of you are looking for. Operators will probably select more than one vendor for the very large project. Other projects will start smaller or will have longer sales cycles and will grow over time, but with less risk of customer concentration and more stable market share in the long-run. To summarize, we are off to a strong start this year, building on the foundation we have created over the past three years, focusing on two strategic markets. The increasing momentum in primary broadband wireless market and the prospect of first orders due in the Personal Broadband are very encouraging to us. We need to remember, however, that both strategic markets are still in their early stages. We are also not completely immune to telecom spending cycles and visibility remained relatively low. Now, I'd like to officially introduce Efrat, I hope that many of you will be able to meet her in person over the next several weeks. Efrat?

Thank you Tzvika, hello everyone. I'm very pleased to join the Alvarion team. As Tzvika mentioned, we are encouraged by the momentum we see developing. Although, Q1 tends to have some seasonality, we reported sequential growth reaching $62.1 million, compared to $60.3 million in Q4. As we expected BreezeMAX growth was strong in particular shipments tripled to 33 million this quarter from only 11 million in Q1 of '06. This includes shipments of our e-platform to over 20 customers during the first quarter of availability. BreezeMAX revenues are also showing strong growth reaching about $25 million in Q1, compared with revenues in the teens during most of last year. We continue to believe that BreezeMAX revenue will grow over 60% for the full year compared to 2006. Turning to the geographic breakdown of revenue, EMEA accounting for about 64% as same as in Q4. Latin America was 17% versus 15% last quarter. North America increased in dollar terms, but accounting for 12% of revenues, compared to 14% in Q4. And APEC made up the remaining 7% similar to the Q4 level. Direct sales accounting for approximately 30% of revenue, distribution was about 50% and OEM represented the remaining 20%. Higher OEM revenues in Q1 are not indicative of any change in the business. It merely reflects the catch up aspect in recognizing revenues under a new agreement with one of our existing partners. As you will remember OEM revenues in Q4 was lower than normal for the same reason. Gross margin in Q1 was 51%. This gross margin is still above our long-term target due to favorable revenue mix. We continued to expect our gross margin to trend towards our long-term target of 45%, but to be in the high 40s for 2007 as a whole. Our non-GAAP operating expenses in Q1 were $26.7 million, compared to $25.3 million in the previous quarter. The increase in operating expenses related mainly to two factors. We continued strategic investments in WiMAX initiative and the impact of currency fluctuation. We expect the recent decline in dollar to result in a larger impact on currency fluctuations in Q2. Non-GAAP results in Q1 included a net profit from continuing operations of $1.3 million or $0.02 per diluted share, compared to $2.1 million or $0.03 per diluted share in Q4. Compared with the results in Q1 '06 included a net profit from continuing operation of $1.5 million or $0.02 per diluted share. Our objective is to continue to invest in WiMAX, but to manage controllable expenses with the objective of remaining profitable on a non-GAAP basis. GAAP net loss in Q1 was $623,000, which includes the deferred stock compensation and amortization of acquired intangibles, partially offset by income from discontinuing operations. The income from discontinuing operations, relates to the receipt of a payment as part of a long-term deal in the CMU business that occurred before the sale of the business last year. We expect to continue to collect during '07 and '08 an outstanding long-term receivable of the CMU business. Cash and cash equivalents as of March 31, 2007 were approximately $120 million, up from about $118 million in Q4. DSOs were 63 days and inventory level was at $37 million, compared with about $31 million at the end of Q4 '06. The increase in inventory is mainly due to the increased activity level and to shipments delivered during the quarter, which have yet to be recognized as revenues. Turning to the outlook, we expect revenues in Q2 to range between $53 million and $57 million. Based on this revenue range, we expect non-GAAP per share earnings from continuing operations, which exclude amortization, stock-based compensation expense, and the effects of our discontinuing operation, to range between $0.00 and $0.03. GAAP EPS will range between $0.00 and a loss per share of $0.03. Looking at the full year, we continue to target overall revenue growth to range between 15% and 20%, including over 50% growth in the BreezeMAX revenues. As Tzvika indicated before, the strong momentum we see in the first half of the year increases our confidence in our ability to continue to execute according to plan and to take advantage of market momentum. At the same time we also see some potential for lumpiness. Therefore, we also caution against expecting constant linear growth going forward. Probably a more realistic exception would be some quarter-to-quarter fluctuations in the context of a general upwards trend. Now, we'll be happy to take your questions.

(Operator Instructions). Your first question comes from the line of George Iwanyc from CIBC World Markets. Please go ahead.

Congratulations on the continued progress. Tzvika, can you give me an update on the trial activity and how much is actually turning into commercial deployment. Is the number increasing at this point?

We indicated that we added, I think we grew from 140 to 150 this quarter. So, there is a continuing conversion of trials into commercial deployment.

Are the commercial deployments getting bigger in size following up on the [Multiple Speakers]?

Yes. You are right this is what we indicated that we have some larger deals it shows that some of the trials moved to commercial deployment, some of the commercial deployments moved from an early stage to a larger deployment.

Do you expect those trends to continue this year and pick up in 2008?

This is part of our strategy to attract as many as customers that we think will grow and to grow with them. So we expect that the trials of this quarter at least some of them to turn out to commercial deployment and some of the commercial deployment to move faster as they offer to deploy more.

And just following up on then gross margin guidance, you came in again at 51% above but you are still looking at the long-term target of 45%. Can you, maybe give some color on what changes in mix you anticipate to happen over the next year and then in 2008?

Usually as the operator starts, they use and deploy more infrastructure as they cover a region, an area and before they start deploying a CPE. So the favorable mix means there is more infrastructure than CPE in percentage. And we expect that going forward when some of these deployment become more, going forward and faster there will be more CPE deployed and therefore when we think about mass market we think that 45% gross margin is the reasonable target.

Okay and my final question, can you may be give us some update on your partnership the ones with IBM, Accton and the others?

Partnership is part of our strategy; you touch on a few different ones we have partnership in the ecosystem coming. Companies like Accton, together we do a CPE and [PCM] (Inaudible) in the ecosystem also companies that I mentioned before like Cisco, (inaudible) Bridgewater and others that together a complete a WiMAX solution we also have in the ecosystem what we call integrator and go-to-market partner which are some global partners companies like IBM, which we are cooperating, mainly today on what I call the public market, as well as the strong local partners in various regions which we are gradually closing.

Your next question comes from the line of Rich Church from Unterberg. Please go ahead.

Well, thank you. Nice results. Tzvika you have talked about the legacy business being a little bit better, especially the wireless DSL. I am wondering if that changes your view for the outlook of it being flat with '06?

Hi Rich. No, When I talked about wireless DSL, it is in general, as the application of wireless DSL both legacy and WiMAX based wireless DSL. If you remember what we indicated is that our estimation for the year is that the legacy will be flat and the WiMAX will be growing over 50%. I know some of you thought it will not happen but the legacy at least this quarter was growing as well. And overall, I think we still see the market as we indicated, that the legacy will be plus minus flat and the WiMAX spot will grow over 50%.

So, maybe you could just give us a little more color on why there might be lumpiness through the year and the commentary about keeping the full year outlook at 15% to 20% I am just wondering why Q1 was good, Q2 outlook sounds pretty solid with the shipments you have gotten in Q1, why not raise that and why would there be lumpiness in such an early phase of the market?

There are few reasons one of them is that the more you have big orders, their timing can create lumpiness. Also recognizing revenue can create lumpiness. And honestly, when you look now the visibility of what exactly will happen in Q3 and Q4 is not so great that we can tell you that we can raise the estimate.

Okay. And can you give us some color on, your increasing your OpEx here and may be you could give us some color on what are the key R&D projects that you are working on that's driving the OpEx increase?

The OpEx increase, as we indicated, it was also a currency fluctuation and also strategic investment in WiMAX. It includes both R&D project, as well as investment in go-to-market in different regions. We naturally invest the mobile WiMAX and different version of products into the 802.16e based solution.

Okay. And can you give us some color on your win rates and who you are seeing most often in the market?

We don't calculate a clear win rate. We see many competitors in the market. It's not always all of them in a specific deal but we see, as I indicated, the small players. But we also starting to see even in the emerging market some of the larger vendors coming.

Okay. Thanks a lot.

Thank you, Rich.

Your next question comes from the line of Irit Jakoby from Susquehanna. Please go ahead.

Hi, thank you. Hi it's Tzvika and Efrat. With respect to 802.16e shipments you mentioned your 20 customers this quarter. Can you describe the competitive environment and what you are seeing competitively for those deployments?

It's deployments for customers who are targeting a fixed, nomadic solution as well as a going to mobile in the future. And the fact is we are the only one who can provide them today a commercial product which is working, which allows them to go and grab market share and deploy and get experience and position themselves, is a great advantage. But we have competition on all of these deals. Some of the large vendors sometimes may win just by promising something they don't. So that's part of the game and the competition. No, the fact we have the product is not enough. We have the product, we have the right sales combination, partnership to win an overall deal and that's what allows us to be successful with these customers.

Yeah, and with respect to those shipments are there specific geography in which there is more concentration of those 20 customers or is it?

It's in most geographies, in Central East Europe, APAC and North America.

Okay, and my last question. So, are those mostly existing or some new customers?

No, these are definitely, some of them are definitely new customers we've been engaged for a long time but we are waiting for the availability of the platforms.

Okay, thank you.

Thank you Irit.

Your next question comes from the line of Steve Ferranti from Stephens Inc. Please go ahead.

Hi, good morning guys. Congratulations on a good quarter. If I look at some of the more recent deals that you have announced, some of them appear to have a potentially significant. Can you give us a sense as to how these types of deals are structured in terms of initial visibility for you guys? It seems like some of them, you come out and announce more of a frame type agreement structure, where there's a dollar content associated with others, sort of have less visibility and grow through time. Can you kind of give us a sense as to how these are structured?

Okay. First of all we announce usually two types of deals. Deals which I would call them a real commercial projects which are going to be deployed and create revenues quickly, as well as in some cases strategic deals which shows our progress in winning even strategic trial in the mobile WiMAX arena. The example we gave with Chunghwa Telecom in Taiwan, I think last quarter. So, we have two of these types. Regarding what we see in visibility. To be very honest, it really depends on the operator, the operators who have big plans and we have to tell them that may be things will take longer than they expect. And there are some operators that actually have a higher success than they expected, because they have a strong brand and things moved out quickly. But overall, when we know exactly what we already have to deal with, what we can expect we are trying to convey it. We are not sure, we try not to give a number like may be some others are doing and hype things than find out it doesn't happen exactly like that.

Understand. And to what extent is Alvarion involved in its customer's network planning process?

In some cases we are heavily involved in the network planning, as well as in the radio planning. And as part of the trend we see that we are more and more involved in what we call professional services and I must say we had recently, we discussed with Pan-European cellular operators. So, together we then we discuss the fact that radio planning of WiMAX have a challenges in know-how and capability it needs to bring, which are completely different to the GSM. So, that's again a knowledge and experience which is good, we have and can help our customer to be more successful.

Okay. And then one final one, do you get a sense in terms of what subscriber uptake rates are in terms of some of these early network rollouts? Are you getting any sort of sense in the end market dynamics there?

It's early to say, and as I said it depends really on each customer plans.

Okay. Okay, thanks very much,

Thank you Steve.

Your next question comes from the line of Daniel Meron from RBC Capital Markets. Please go ahead.

Thank you. Hi Tzvika and Efrat. Congrats on a very strong quarter. Couple of questions here, first of all can you provide us a sense of linearity in the quarter, how it was versus other quarters?

It was about the same as previous quarter.

Can you break it down?

Don't break it down, but it's more towards the end.

And then visibility, you mentioned that it serves low, but is it any better, say compared to the previous quarter? You obviously had pretty high shipments of WiMAX products here?

No.

Okay. And then the shipments that you noted $33 million versus the recognized $25 million, how do you expect that to flow through next quarter or is it going to be spread out even longer than that as far as revenue recognition?

It could spread up over a several quarters depending on the regions.

Okay. And then last one for me, you mentioned before that there is a lot of talks from competitors, but you don't see them as much. Who do you see more often or, and regionally who do you see? And what do you think your advantages are compared to those competitors?

We see several competitors. Some of our competitors make a lot noise on a deal they do actually with our solution. And I will issue a big PR. But, overall we do see the big vendors like Motorola and Alcatel-Lucent, some of the small players in some of the emerging markets like Redline and Airspan. And what is our competitive advantage? We have several competitive advantages. I think the first one is that we have something that works and customer can go and deploy and make a profit on services and get a market share, not just play in the Lab. Most of them are making a lot of noise on let's say product. In addition to that, I think that our strong experience brings up a product which is very feature rich. There is a lot of things they can do with this product and all the experience we have with all the customers all over, and all that debugging of the system and improving of feature comes out in these solution. The strong migration path to e is also is a key in some of these deals. And I would combine that we do know as a company we are rich in our dealing to partners. So, in many cases we combine the strong product offering with the very strong sales and marketing team of our own or with the sales and marketing team and relationship of our strong local partner.

Thanks again. Last one from me. Right now you seem to have pretty good traction in emerging markets and with smaller service providers on the scale. When do you expect the larger carriers to join the game? We know of Sprint, but when should the operators like British Telecom come over, Deutsche Telecom join into the game here?

I think, first of all I tell you this every conference call to all, let's not think that only big names bring big dollar and sometimes big names is very important. I'm not going to tell you where the dollar comes from. For us big names are also important, it gives some reference about available capability example we gave last quarter of NTT. The issue is not how many dollars they buy, but the fact that we've been passing a very thorough examination both of our product and solution, as well as the company processes and quality. Alvarion is working with some of these potential customers. I think that some of the big guys don't have a license, so they cannot even deploy. So, even if the U.S. is who has except Sprint have a license to deploy mobile WiMAX and things like that and not necessarily you have many potential big operator immediately. In other places, as we indicated the Japan, Taiwan, UK, once the license process will start some big companies will go and bid for a license and we are in discussion with them and hopefully we could win some of them. I think one of our strength is the ability to sell to so many places, to so many markets, this diversity of product offering and market is a strong strength for Alvarion.

Okay. Thanks, Tzvika. Good luck going forward.

Thank you, Daniel.

Your next question comes from the line of Kevin Dede from Merriman. Please go ahead.

Hi, Tzvika, Efrat, thanks for taking my question and congrats on nice quarter.

Thank you.

Yes. Tzvika would you mind giving us just a timeframe on the certification process for Wave 1 and Wave 2 and just giving us an update on how you think that's going go to play out this year?

Certification, I must say and you probably know is already delayed compared to what originally was planned and announced by the WiMAX Forum. We are bit sorry for it, because we've already and we could passed easily the Wave 1 certification on the time it was suppose to start but overall the certification was a delayed for many reasons. The preparation of the process, the protocol, the approval of the procedure, the test equipment, so currently I think we expect that the Wave 1 will start probably this quarter or may be next one and I believe Wave 2 a towards the end of the year, it might slip to '08, but I don't know yet, Official dates are coming from the WiMAX Forum, its beyond our control how it will end up. It's important however to know that we are discussing with customers and one of the key issues for them is that we'll have a strong interoperability that guarantees that we will work with the devices that we'll have in the networks and that's more important to them than certification. However, I think the mobile WiMAX certification is a key element for the WiMAX industry to be successful and we are supported very strongly.

Can you also review your card introduction, you mentioned in your prepared remarks sometime in the summer, could you just give us an indication of how widely you think that will be available, who will be interested and also how that complements your personal broadband uptake in your views there?

Our Accton joint venture is a company that we target to address many customer including some of the large competitor. So it's not only to sell these PC cards to Alvarion's and other customers but also to some of our competitors. I believe that what we will see the availability is no it's now, but the commercial in mass market will only happen in 2008, once this mobile WiMAX network will start to be deploying. So before that it will be mainly for the trials, maybe to show progress but it will not be a huge mass markets.

Okay. Last question, just wanted to understand more about our currency fluctuations and the impact that you are seeing there?

Sure I'll take this. Basically, the dollar got weaker against the shekels lately and we've seen the effect already in this quarter in Q1 of '07. As the rates are now we see even a stronger impact in the future in the next coming quarters. That's pretty much what we see. And that's part of effect no the OpEx obviously.

Okay. So you would have expect, how would that change your expense structure?

I think not looking at the accounts impacts what we have said before we still see coming and I think Dafna and Tzvika was talking about a $1 million increase in OpEx q-over-q in '07. I'd probably see a similar effect between $0.5 million to $1 million of currency effect as I said again if the dollar is at the rate it is it now.

$0.5 million to $1 million per quarter going forward?

Yes.

Okay. Very good. Thank you for taking that. And congratulation again on nice quarter.

Thank you, Kevin.

Your next question comes from the line of Larry Harris from Oppenheimer. Please go ahead.

Yes. Well, thank you if I could add my congratulations for the results on the quarter. Any update on WiMAX licensing opportunities in Europe, particularly France and Germany? Thank you.

Good morning, Larry. In France and Germany, we are still competing both in France and Germany. I think France might move a little bit faster. Germany, I think is still in a preparation stage to (inaudible) are looking what exactly they're going to do on the nationwide deployment, probably wanting to deploy an e-based solution. I expect that the some contract will be signed towards the end of this year in Germany, and in France maybe a little bit earlier. We are targeting few I think we can win some, , but we'll not win all.

That's great. And in terms of China, what's the outlook there, if are they still looking at 3G?

Okay, China is a complicated question. I would say this way. At last after a long time, the 3G, Chinese version of the 3G was announced and contracts have been awarded for the TD-SCDMA and 3G licensee. So this is a good move because before that would happen, nothing will move in China, but we expect is that after this is happening probably in a six months time, we'll see that 3G is a worldwide 3G licenses also awarded in China and only after that to see some early move on mobile WiMAX. Therefore I don't expect mobile WiMAX to happen in China before 2009 or 2010. Regarding fixed WiMAX to the 3.5 GHz license and some of the operators are operating a CX in the other operator territory and they are looking at implementing WiMAX, some of them are already deploying, some of them are in trial stage. And we are quite successful we've been but its not going to be huge market like people expect China because it’s a -- in a way a initial application of large operator.

Yeah, okay I understand that. All right well thank you very much.

Thank you, Larry.

Your nest question comes from the line Andy Schopick from Nutmeg Securities please go ahead.

Thank you, good morning. Tzvika, I'd like to ask you a question about one of your African customers; going to assume that the opportunity that you are currently involved in Telkom South Africa is one of the two $1 million African plus accounts here in the quarter. And what I'd really like to get a sense of at least in this particular country is over what timeframe would this network likely be built our and in that particular country as an example what could the revenue opportunity be to complete this network over a certain timeframe in terms of what Alvarion might realize in revenue here?

It's very similar to the question Steve asked before. It really depends if they'll go and do all their plans so part of it will happen. Telkom South Africa is a very respectable customer and we are supplying them in the past still our also eMGW solution. Usually they work very well reviewing the customer, building the processes for deployment and then move into deployment. The deployments are on regional basis and regional demands within South Africa. The potential is very big, because this is a country which doesn't have a lot of a broadband infrastructure. They are putting now huge investment now before they will host I think the World Cup in soccer in 2010. And copper is also not very popular there because it's been stolen over and over, so wireless is actually an attractive solution. So, this could turn out to be a very big project over millions and millions of dollar. But, I think it will take few years and it will gradually ramp up.

I appreciate that. And again, I am just trying to get a sense as to how big of an opportunity an in country network deployment of this nature could really be, and I don't think you really want to characterize it more than you just have? I also have a follow up question for Efrat. I am wondering if you have any particular current concerns right now on the legacy side of the business with respect to any excess and obsolescence issues with respect to inventory. How you are going to manage that process? Whether you have already started to increase your inventory reserves or anticipate doing that in order to minimize any potential future exposures?

Based on my three weeks in the company, may be Tzvika should…

Yeah. I think there are two aspects to it. You are talking about the components which are end of license in some of our legacy. And usually what we do is we, since we designed the system for many of the solutions we can come with a substitute. Those we do not, we've anticipated exactly what would be the expected volume and we buy some components. Since we designed the system, usually it's a very discrete, the components would cost, is not very high. Regarding how we manage the inventory. We usually have a constant planning and looking at the future. We also have different inventory level and risk we take on inventory base, if it's very high revenue or something which is very old, and through that we manage the inventory very well.

Okay. So, it's not really that much of a concern to you right now?

No, it's managed quite well.

Thank you.

Next, we'll go to line of Ehud Eisenstein from Oscar Gruss. Please go ahead.

Yes. Thanks for taking my question. Very nice numbers, guys. Tzvika can you elaborate on the new joint venture with EarthLink you plan to stay and you replace one of your largest competitors there?

Yes, we are working EarthLink. EarthLink is deploying as you know a Mesh Wi-Fi in various cities in the US. We provide the backhaul part of the Mesh Wi-Fi and it's in initial stage it could grow nicely once they deploy more.

I see. And some milestones regarding the 4Motion, I mean do you see starting to ramp up first half of '08 or second half or if you sort of give us the more color on that? Thank you.

I think we indicated in the past that we expect revenues in the second half of '08 with the availability of the handle devices and the notebooks. It could be a little bit earlier for mobile applications.

But you do see it as an '08 event?

Mobile WiMAX I see as an '08 event.

Okay. And then last question from me on the up tick on the financial income in the quarter and plus?

Well, I wouldn’t take it as an indication going forward I think the numbers so far have been, I mean over $1 million in financial income is probably accurate.

Thank you so much. And good luck.

Thank you.

Your next question comes from the line of Joanna Makris from Canaccord Adams. Please go ahead.

Hi, good morning, I am wondering, given what looks like very strong gross margin numbers, you can potentially talk about, so that what you are seeing as a normal flip between your base station business and your CPE. And you know how that mix will impact sort of your gross margin assumptions going forward. And secondly, for better verse of a lot of focus on Axtel given that they are very close, they commented as making decision in the June timeframe if you could perhaps comment on how you are feeling there and potential impact from the contract there? Thank you.

Okay. Regarding the mix we don't give a mix of base station and CPEs. Overtime, CPE portion will grow, one of the reasons, we are strong growth margin is that -- I think we are premier product but also because we are owing the technology. So the fact you own technology maybe your OpEx is a bit higher but the gross margin as much as better because there isn't some one else that you have to pay much for the technology. Regarding Axtel, Axtel in their conference call to their investor discussed about wanting to deploy big project of WiMax this year. There was a recent interview on the press with one of the Axtel executive who indicated what they do and also they are testing Alvarion. So I can tell you they are testing our solution and we will compete to get portion of the deal.

Your next question comes from the line of Santosh Rao from First Albany Capital. Please go ahead.

Hi, thank you. I have just a few questions. First one, just wanted to know how important is it for you to be part of Sprint's ecosystem for WiMAX equipment? And do you see yourself participating in that deployment down the road?

As we indicated in the past, we didn't target Sprint as a customer. I think to be part of the ecosystem is very important. I think we'll participate in the ecosystem if we are in the Sprint deal or not. Because everyone who is doing a handset and handheld device, even if it's a competitor, they are interested in selling these. I mean let's remember both Nokia and Motorola today want to sell their handsets to as many network as they can, not necessarily to an only Motorola network. So we'll be part of this ecosystem anyhow and the importance of Sprint deal by creating the momentum for WiMAX and for the ecosystem is something that happened and we'll continue and we'll enjoy it. Regarding the question if we will participate in the future with Sprint? It's a possibility, others will not meet what they committed and if Sprint will be interested in something we can certainly review.

All right, just going to another different question. Just the Indian subcontinent, India, Pakistan, Bangladesh has quite aggressive WiMAX deployment going on. When is the earliest you see meaningful revenues from there? When do you see -- I just wanted to know whether your revenue is including a little bit of revenues from India right now and when do you think it will get really meaningful down the road?

As we indicated in the past, we have a two commercial deployment with large operators in India. We discussed it also in the last conference call. However, I want to just highlight that the huge noise doesn't mean there are huge networks in deployment already there. It's the plans for the future, not necessarily huge things happen there as the noise that comes from there.

So, it's more '08 thing you think?

No, I think it's going to happen in '07. In India, for example, there is still a need to reorganize the frequency around the 3.5 Giga, which the government intends to do. Think about a 100 Megahertz from 3.3 to 3.4, 3.5 and once it happens I think some of the operators might go ahead and deploy it.

Sure. Yeah, and one last question. I remember reading two weeks back, Ericsson, I think discontinued their WiMAX program and it's going to resell Airspan equipment. And do you see that is a broader trend with the larger OEMs or is it just a one off thing?

I think it's the opposite. The trend was that everyone joined WiMAX and Ericsson, I think, naturally from their leading position in 3G and wanting to secure their future of LTE reacted as they reacted. I think the public announcement came I think as a reaction to the Chairman of Vodafone saying that if the 3G industry will not take itself quickly seriously, WiMAX would just create [effects] in the field. And Ericsson wants to push LTE and their position I think is natural. I wouldn't expect differently strategically from them. But, you should note, however, that in the same time Sony Ericsson joined the WiMAX row and intends to do a handset and handheld devices for WiMAX.

All right. Yeah, thank you.

Thank you.

Your next question comes from the line of Ari Bensinger from Standard & Poor's. Please go ahead.

Yes, thanks, most of my questions have been answered. Just on the business model; looking forward given the assumption that gross margins should trend more towards your long-term target. Where are you looking to gain the most operating leverage from R&D, at over 20% of sales? It's a kind of high relative to the peers, and I am wondering that -- I understand you have to invest before the large players jump into the market full forced, and I am wondering if there is any leverage we should get specifically on that line or is there is something that we should model going forward for the foreseeable future?

As Efrat indicated, we see continued growth in investments as long as we stay profitable of course. And we see the leverage coming from increased in revenues. Also to remember that the gross margin is just what we see as a long-term, it doesn't happen immediately and we indicated that we expect all 2007 to be in the high 40s. Our long-term model talks about R&D, and shares and marketing each in the range 15%, G&A in the range of 5%, so with a 45% gross margin we would reach a 10% non-GAAP profitability.

But that's just--

Operational profitability.

But that just 10% long-term target, given your 22% at the quarter is that something that's achievable I mean or is that something we should be modeling a lower R&D as a percentage of sales going forward?

Over time when revenue grows their percentage of the overall OpEx including R&D will go down.

All right, thank you.

And your final question today comes from the line of Gunther Karger from Discovery Group. Please go ahead.

Oh yes, good morning. Any thought of any future acquisitions at this point?

Acquisition, the Company strategy also includes M&A and we're constantly evaluating opportunities in the market. What I said also in the past is we are very focused on WiMAX. Part of the good results you see is the recent divesting we did last quarter. It allows us to focus better and execute better our strategy. So, currently if we look on our own potential M&A acquisition it's only to strengthen our WiMAX position in the market.

Thank you

And Mr. Friedman I will turn it over to you for any closing comments.

I would like thank everyone for participating in our conference call and also many thanks to those who have to wake up very early in the West Coast to listen and looking forward to see you all in the coming weeks. Thank you