Shares of Ottawa-based DragonWave soared 74 per cent in midday trading on the Toronto Stock Exchange Wednesday after news the firm had reached an agreement with Nokia on the companies’ future relationship.
“We believe that this change in our channel approach will position us better for the future,” DragonWave CEO Peter Allen said in a statement. “Recently the landscape in the Nokia channel changed and in anticipation of further changes we have reconsidered our channel strategy.”
One year ago, 60 per cent of DragonWave’s revenue came from its Nokia channel. In its latest quarterly report, that number was down to 37 per cent as a result of Nokia’s acquisition of Alcatel-Lucent, a DragonWave competitor.
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DragonWave (TSX:DWI) (NASDAQ:DRWI) said it will continue to supply Nokia with its “legacy” products while providing software maintenance and hardware support.
The companies might continue to “address additional future specific customer requests” on a case-by-case basis, DragonWave said in a statement, replacing what the company called the “current open ecosystem environment.”
Mr. Allen said DragonWave will refocus on a “direct touch” approach with its customers but will remain flexible in order to offer its customers the best possible service.
“I am pleased that we have reached a clear understanding with Nokia on the future areas for our collaboration,” he said.
By 2 p.m. Wednesday, DragonWave shares were trading at 17 cents per share on the TSX, up 48 per cent.
The company has until February to get its share price consistently over $1 or it risks being delisted from the NASDAQ exchange. Shares were up 29 per cent to 12 cents in mid-afternoon trading on the NASDAQ on Wednesday.