Sierra Wireless Reports Second Quarter 2011 Results

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Sierra Wireless Reports Second Quarter 2011 Results

  • Revenue in the second quarter 2011 of $139.9 million, in-line with guidance
  • Non-GAAP loss from operations of $0.8 million and diluted loss per share of $0.03
  • Core M2M revenue up 14% year-over-year
  • Mobile Computing business launching new 4G LTE AirCard® products in Q3
  • Company expects significant sequential revenue growth in the second half

Sierra Wireless, Inc. (NASDAQ: SWIR) (TSX: SW) today reported second quarter 2011 results. All results are reported in U.S. dollars and are prepared in accordance with United States generally accepted accounting principles (“GAAP”), except as otherwise indicated below.

Revenue for the second quarter of 2011 was $139.9 million, a decrease of 12% compared to $159.1 million in the second quarter of 2010, and a decrease of 3% compared to $144.3 million in the first quarter of 2011. The year-over-year revenue decrease was principally driven by the loss of revenue from Barnes & Noble and Clearwire, which together accounted for nearly $25 million in revenue in the second quarter of 2010.   Mobile Computing revenue was $66.0 million, down 13% compared to $75.5 million in the second quarter of 2010.  Machine-to-Machine (“M2M”) revenue was $73.9 million, down 12% compared to $83.6 million in the second quarter of 2010.  Excluding sales to Barnes & Noble, the company’s core M2M business increased 14% in the second quarter of 2011 on a year-over-year basis.

Notwithstanding a slower than expected start to 2011, Sierra Wireless remains well positioned in our two target markets.  In Mobile Computing, we are launching several new 4G LTE products with key operators and PC OEMs.  In M2M, we continue to build on our global leadership position and successfully drive value chain expansion,” said Jason Cohenour, President and Chief Executive Officer.  “Our growth drivers remain intact and despite some product launch delays, we expect significant sequential revenue and earnings growth in the second half of 2011.

On a GAAP basis, gross margin was $39.1 million, or 28.0% of revenue, in the second quarter of 2011 compared to $46.2 million, or 29.0% of revenue, in the second quarter of 2010.  Operating expenses were $45.4 million and loss from operations was $6.3 million in the second quarter of 2011, compared to operating expenses of $49.7 million and a loss from operations of $3.5 million in the second quarter of 2010.  Net loss was $6.8 million, or $0.22 per diluted share, in the second quarter of 2011, compared to a net loss of $8.6 million, or $0.28 per diluted share, in the second quarter of 2010.

On a non-GAAP basis, gross margin was 28.0% in the second quarter of 2011, compared to 29.1% in the second quarter of 2010. Operating expenses were $40.0 million and loss from operations was $0.8 million in the second quarter of 2011, compared to operating expenses of $41.7 million and earnings from operations of $4.7 million in the second quarter of 2010.  Net loss was $1.0 million, or $0.03 per diluted share, in the second quarter of 2011 compared to net earnings of $4.4 million, or $0.14 per diluted share, in the second quarter of 2010.

Non-GAAP results exclude the impact of stock-based compensation expense, acquisition amortization, integration costs, restructuring costs, foreign exchange gains or losses on translation of balance sheet accounts, and certain tax adjustments.  We disclose non-GAAP amounts as we believe that these measures provide our shareholders with better information on actual operating results and assist in comparisons from one period to another.  The reconciliation between our GAAP and non-GAAP results of operations is provided in the accompanying schedules.

Financial Guidance

The following guidance for the third quarter of 2011 reflects current business indicators and expectations. In the third quarter of 2011, we expect revenue to improve significantly relative to the second quarter, driven by the launch of new 4G AirCard products, as well as continued steady year-over-year growth in our core M2M product lines.

Inherent in this guidance are risk factors that are described in greater detail in our regulatory filings. Our actual results could differ materially from those presented below. All figures are approximations based on management’s current beliefs and assumptions.

Q3 2011 Guidance Consolidated
Non-GAAP
Revenue
Earnings from operations
Net earnings
Earnings per share
$150 to 155 million
$1.0 to $2.0 million
$0.8 to $1.6 million
$0.03 to $0.05 per share
About Sierra Wireless
Sierra Wireless (NASDAQ: SWIR) (TSX: SW) offers industry-leading mobile computing and machine-to-machine (M2M) communications products and solutions that connect people, devices, and applications over cellular networks. Wireless service providers, equipment manufacturers, enterprises and government organizations around the world depend on us for reliable wireless technology. We offer 2G, 3G and 4G wireless modems, routers and gateways as well as a comprehensive suite of software, tools, and services that ensure our customers can successfully bring wireless applications to market. For more information about Sierra Wireless, visit www.sierrawireless.com.
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