Sierra Wireless issues lower guidance for Q2

Wireless modem maker Sierra Wireless saw its shares slump 8.4 percent after the company gave lower guidance for the second quarter.

In an interview with Dow Jones, Sierra's chief executive Jason Cohenour said the shortfall will come about because of a shift in the company's product mix. In particular, sales of the company's lower-margin AirCards is expected to increase in the second quarter, putting the squeeze on earnings and margins.

Sierra is forecasting second-quarter non-GAAP earnings to come in between 5 cents and 12 cents a share, below analysts' estimates of 14 cents.

Sierra has been working to diversify its customer base by moving into the machine-to-machine communications sector as its AirCard business hits competition. Cohenour said the company's efforts to diversify have been successful. M2M revenue now accounts for 59 percent of the company's overall revenue, up from just under one-third a year earlier.

Indeed, the M2M market drove Sierra's revenues of $151.3 million in the first quarter, a 36 percent increase from the year-ago period. M2M revenue came in at $88.7 million. Sierra earned 13 cents a share on an adjusted basis, beating its own guidance and the Thomson Reuters mean estimate, which were both 11 cents.

Related articles:
Sierra Wireless cuts 10% of its workforce
Sierra Wireless announces HSPA+ modems
Who needs WiMAX devices? Sprint announces 3G/WiMAX mobile hotspot