Sierra Wireless Will Go HigherSWIR) announced second quarter ended June 30, 2016 total revenue of $156.2 million, up 9.4 percent sequentially from $142.8 billion in first quarter of 2016 but, down 1.1 percent year-over-year from $158.0 billion in second quarter of 2015. Going forward, the company estimates complete fiscal year 2016 total revenue at lower end of its earlier declared revenue guidance for the year in the range of $630 million to $670 million.
A look at the performance
Sierra declared second quarter of 2016 non-GAAP net earnings of $6.4 million or $0.20 per diluted share, down 25.6 percent year-over-year from net earnings of $8.6 million, or $0.26 per diluted share in second quarter of 2015.
The global Internet of Things ("IoT") provider reported continued year-over-year decline in its top line primarily due to weaker revenue for the company’s OEM solutions segment somewhat offset by superior revenue expansion witnessed in its connectivity and cloud services and Enterprise Solutions segments.
Sierra illustrated somewhat better second quarter of 2016 results compared to its earlier expectations mainly due to robust fresh customer win activities across all BUs coupled with growing connectivity & cloud customer base.
However, the company seems cautious on its near-term outlook and estimates third quarter and later half of 2016 revenue guidance to be weaker than earlier projected and primarily driven by significant weakness from certain key existing growth programs and customers somewhat offset by healthy revenue contributions from new customer growth programs.
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Sierra Wireless is extremely well-positioned for delivering sustainable long-term growth being supported by a solid cash position with no debt. The company currently has $98.4 million of net cash with negligent near-term and longer term obligations, encouraging the global IoT provider to make future growth investments while offering attractive shareholder returns.
The international provider of Internet of Things ("IoT") is expected to provide sustainable long-term growth despite near-term top line weaknesses as a result of exploding demand for faster data services and cloud data storage solutions.
These moves will drive growth
During 2015, Sierra Wireless notably grew its device-to-cloud proficiencies by uniquely concluding three strategic acquisitions and quickly growing its connectivity and cloud services business. As of January 16, 2015, Sierra acquired every share of Wireless Maingate AB ("Maingate") which is a Sweden-based data management and IoT connectivity services provider.
As of June 18, 2015, Sierra strategically acquired significantly every asset of Accel Networks LLC ("Accel") which is a leading provider of well-managed mobile broadband advanced connectivity services particularly for scattered enterprises all through North America. As of September 2, 2015, Sierra uniquely captured every share of MobiquiThings SAS ("MobiquiThings") which is a cellular virtual network provider in France offering intelligent worldwide connectivity services all across the IoT market.
The Enterprise Solutions growth segment comprises of various intelligent gateways and routers coupled with management applications and tools that allow seamless mobile connectivity for enterprise, industrial and mobile customers. The company’s advanced 2G, 3G and 4G LTE smart mobile gateways and routers are crafted for usage where security and reliability are vital, and thus used in enterprise networking aspects, industrial, energy, field services, public safety and transportation globally. The company’s technologically-advanced gateways and routers are simply configured for precise customer applications, while also supporting on-board embedded programs leveraging its ALEOS application context.
The well-planned acquisitions of other global IoT services providers by Sierra Wireless along with an already strong set of wireless routers and gateway solutions is believed to significantly expand the company’s innovation delivering capabilities while expanding its market share to quickly become an industry-leading IoT Services provider.
Overall, the investors are advised to “Buy” Sierra Wireless Inc. considering the company’s compelling near-term and longer term growth prospects being supported by its solid financial position with notable total cash of $98.43 million and no debt, encouraging the company to make future growth investments. The profit margin of 0.73% also seems satisfactory. The PEG ratio of 1.70 signifies attractive and industry-leading company growth.
Published on Aug 24, 2016By Subhen Mittra