DragonWave forecasts revenues will double, expands to Asia

DragonWave Inc., an Ottawa-based manufacturer of wireless backhaulequipment, is still losing money but announced record revenues for itsquarter ending May 31.

The company sold $16 million worth of equipment during that quarter, up nearly 50 per cent from a year earlier.

“This is the highest quarterly revenue recorded in the company’shistory,” DragonWave chief financial officer Russell Frederick saidduring a conference call Wednesday.

The company lost $2.9 million during the quarter, attributing $1.7million of that to foreign exchange – specifically the rise of theCanadian dollar relative to U.S. currency.

DragonWave’s products are designed to allow wireless operators touse microwave wireless, rather than fibre or T1 services, for backhaul.Its biggest customer is Clearwire, which is setting up networks in theU.S. using Wireless Interoperability for Microwave Access, or WiMAX.

More than half of DragonWave’s revenues during the last quarter camefrom Clearwire, which plans to have 120 points of presence by the endof next year, said Peter Allen, DragonWave’s chief executive officer.

“Clearwire launched service in Atlanta and Las Vegas in last month,” Allen said.

Last week the company announced GlobaliveWireless, which won spectrum in last year’s Industry Canada AdvancedWireless Services auction, will use DragonWave’s microwave backhaultechnology in its network.

“The next wave is 3G and the buildout of 3G networks,” Allen said.“Our solutions are relevant to those types of operators as well asWiMAX operators.”

Thanks in part to Clearwire, DragonWave anticipates revenue for thequarter ending Aug. 31 will be $32 million, and revenues for the entireyear will be $100 million.

DragonWave announced last year, after the close of last year’s third quarter, it would cut 20 of its 160 employees.

Asked whether DragonWave plans to hire this year, Allen said thecompany will open an office in the Asia-Pacific region within the nextthree months and expects it will need staff there. He added the firmhas not decided where to base its Asia-Pacific office.

Dragonwave spent $3.024 million on research and development duringthe quarter ending May 31, down slightly from $3.131 during the sameperiod in 2008.

Asked whether the company plans to increase that, Allen said:“That’s an area where we are continuing to consider the pace ofinvestment we need to make.”

He added in consulting with customers, DragonWave has “a number ofinnovative ideas” but added the rate at which they want to pursue them“is something we are reviewing.”

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