Today we’ve published a new report on Aviat Networks (AVNW).
Aviat Networks is recognizing revenue before billing, not collecting cash from 3rd world countries, and funding operations by delaying payments to key suppliers. We believe this has inflated earnings, cash flow, and masked a declining core business, setting up a violent reversal.
• Earnings appear driven by accounting, not operations. Aviat is recognizing revenue before billing with what we believe will be a large portion of AR written off from suspect countries. Receivables and unbilled revenue have reached historical high levels — suggesting a meaningful portion of reported growth is pulled forward.
• Cash flow is structurally weak and masked by working capital. The company is deferring costs through inventory and prepaids while stretching supplier payments to record levels, creating the appearance of profitability despite negative underlying cash generation.
• A key supplier dispute exposes real financial strain. NEC has initiated arbitration over ~$55 million of obligations, raising questions about Aviat’s liquidity, supplier relationships, and the sustainability of its operating model.
In our view, Aviat’s reported performance is not supported by its underlying business — and these pressures are beginning to surface.
You can read the full report here:
www.glasshouseresearch.com/research
Best, GlassHouse Research
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