Sierra Wireless' posts Q2 profit on mobile computing, M2M strength

Strong revenues from mobile computing products and growth in its machine-to-machine business helped Sierra Wireless achieve strong revenue and earnings results during the second quarter of 2012.

Revenue for the second quarter of 2012 was $167.4 million, up 19.7 percent from $139.9 million in 2011's second quarter. Net earnings were $3.6 million in the second quarter of 2012, compared to a net loss of $6.8 million one year earlier.

"Exceptionally strong sales of our 4G mobile computing products, combined with steady growth in our machine-to-machine business, led to higher than expected revenue and profitability in the second quarter of 2012," said Jason Cohenour, president and CEO.

"Mobile computing revenue of $89.9 million represents 36 percent year-over-year growth compared to the second quarter of 2011 and gross margin was a very healthy 28.1 percent. AirCard and PC OEM sales each contributed significantly to the strong results," said Cohenour during Sierra Wireless' second-quarter 2012 earnings call, according to Seeking Alpha's transcript.

The quarter saw new product introductions, such as Sierra Wireless' Tri-Fi Hotspot, which supports Sprint Nextel's (NYSE:S) LTE and CDMA EV-DO networks and Clearwire's (NASDAQ:CLWR) mobile WiMAX network. Sierra Wireless also gained a new channel through Sprint sub-brand Virgin Mobile.

Revenue from the sale of embedded modules to PC OEMs grew 50 percent year-over-year. "During the quarter we experienced solid contribution from a broad range of PC OEM customers including HP, Fujitsu, Lenovo and Panasonic. Revenue contribution from Japan was once again exceptionally strong as we continue to benefit from large rollouts of LTE-enabled notebooks with enterprise customers in Japan," said Cohenour.

In June Sierra Wireless unveiled what it calls the world's thinnest LTE embedded module, the AirPrime EM7700, which is designed for use in ultra-portable notebooks, Microsoft (NASDAQ:MSFT) Windows 8 tablets and other thin devices.

During the second quarter of 2012, the company gained its highest quarterly revenue ever in its M2M business, with revenue rising 5 percent year-over-year to $77.5 million despite continued weakness in Europe. "This significant headwind was more than offset by strong growth in other regions including North America and Asia," said Cohenour.

Also during the quarter, Sierra Wireless announced a technology collaboration with Audi to demonstrate LTE connected infotainment solutions for Audi cars and launched the LTE-enabled AirLink GX440 intelligent gateway for AT&T's (NYSE:T) LTE network. Further, Sierra Wireless began collaborating with Vodafone on a new global M2M partnership to promote the operator's AirVantage cloud services.

On Aug. 1, Sierra Wireless announced that it had completed the acquisition of Sagemcom's M2M business, plans for which were first disclosed in June. Sierra Wireless acquired substantially all of the assets of Sagemcom's M2M business for about $54.9 million in cash consideration plus assumed liabilities.

For more:
- see this Sierra Wireless release and this release
- see this Seeking Alpha transcript
- see this Reuters article

Related articles:
Sprint launches LTE, promises average speeds of 6-8 Mbps
Sierra Wireless Airlink gateway is ready for AT&T LTE network
Sierra Tri-Fi hotspot available via Sprint
Report: M2M connections to soar to 359M in 2016
Sierra Wireless: LTE becoming an M2M prerequisite

Suggested Articles

Skeptics say the risk of a network outage is too high to make 5G remote surgery possible but 5G experts say it’s not as farfetched as it sounds.

Celona is jumping head first into the CBRS arena, targeting enterprises that want a private LTE or 5G network.

One of the players in CBRS that hasn’t been making a lot of noise about its role as a SAS provider—until now—is Amdocs, which once was known for its wireless…