Sierra Wireless (SWIR, Financial) announced third-quarter revenue of $143.3 million, up by 27.6% over the same period last year and up by 6.1% compared to $135.0 million during the second quarter. The company has also provided non-GAAP fourth-quarter revenue guidance in $145.0 to $148.0 million range.
Earnings analysis
Sierra Wireless declared third quarter net earnings from continuing operations of $7.7 million, or $0.24 per diluted share, compared to net earnings from continuing operations of $3.5 million, or $0.11 per diluted share during the same period last year. Sierra expects fourth-quarter non-GAAP earnings from operations in $9.0 million or $0.25 per share to $10.0 million or $0.28 per share range.
The way ahead
The OEM solutions business segment of Sierra witnessed solid third quarter 2014 revenue growth, allowed by the rising sales of its 3G and 4G embedded modules.
There was significant revenue contribution from Sierra’s other major market segments including payment and sales, energy, mobile computing, transportation and automotive. Some key design wins were also recorded for popular market segments like insurance Telematics, mobile computing, enterprise networking, automotive and energy.
The significant sales growth and noteworthy revenue contributions from the mentioned key segments of Sierra Wireless are expected to propel the company’s growth, going forward.
Lately, Sierra declared a key design win with Itron, which is a worldwide leader in developing and implementing smart metering and is well-suited for Sierra’s AirPrime embedded modules in its unique way of implementing smart grid solution for utility customers globally.
In Insurance Telematics, Sierra captured a deal with Octo Telematics to offer wireless connectivity for usage based insurance solutions of Octo in Europe. Moreover, Sierra declared a major design win in the automotive space, securing innovative design wins for upcoming connected car introductions in Asia, Europe and North America.
Therefore, Sierra is widening its range of operations in different sectors and innovating strategically to compete with the rising competition in this rapidly changing marketplace.
Innovative offerings bode well for the future
Sierra’s innovative HL central product offerings are gaining significant market traction coupled with the continued leadership in 3G and 4G technologies is believed to drive excellent company growth.
The futuristic smart module line of products is based on Sierra’s Legato embedded software platform which is further accelerating the design wins. The higher powered multi-core hardware platforms along with Sierra’s Legato embedded software platform are significantly attracting both small developers and major OEMs. Sierra’s smart module platforms are allowing its clients to generate significant revenue within the stipulated time, reduce program risk and cost and lower entire solution cost.
Sierra’s unique line of product offerings is attracting new customers and enabling the company to maintain the strong base of already involved key clients.
For the enterprise solutions business segment, Sierra experienced excellent revenue growth contribution for the quarter. The enterprise solution segment grew significantly, propelled by the key acquisition of In Motion Technologies.
In the quarter, transit markets and the public safety utility remained solid revenue contributors and marked significant new customer wins. These include the Westminster Police Department of Colorado leveraging In Motion mobile gateways to allow mission critical cellular connectivity to its police vehicles. The Denver Regional Transportation District adopted the In Motion mobile gateway solution for enabling mobile to identify the vehicle location automatically and fare payments through smartcard for over 1,100 buses.
The widespread usage of technologies developed by Sierra Wireless highlight the company’s deep understanding about leveraging unique methodologies for making people’s life easier.
Sierra also made available a unique bundled solution called AirLink Enterprise Connect in the quarter. The solution leverages Sierra’s ES440 gateway well-equipped with 4G LTE service and a particular version of its AirVantage Management Service for providing managed business continuity for distributed enterprise locations like branch offices and retail outlets.
The consensus forecast of 30 polled investment analysts detailing Sierra Wireless suggests investors to hold their position in the company owing to the deterioration in the earlier analyst’s sentiments in 2014.
Conclusion
Sierra is a leading innovator with significant market share. Both top line and bottom line are expanding rapidly and there’s a track record for the company to deliver superior growth and enhanced shareholder value through key mergers and acquisitions.
