* Forecasts Q1 loss per share $0.05-$0.08 on higher costs
* Expects strong revenue growth in Q2
* Company beats estimates in Q4
By Krithika Krishnamurthy
Feb 6 Canadian wireless communication equipment
maker Sierra Wireless Inc said higher operating
costs will result in a first-quarter loss, even after posting a
profit that beat analysts' estimates in the latest three months.
The Vancouver-based company forecast a loss in a range of 5
to 8 cents per share for the first quarter, due mainly to higher
certification costs for new products and a strengthening
Sierra sells mobile broadband devices, embedded modules,
gateways, routers and cloud platforms to distributors and
Original Equipment Manufactures (OEMs), which integrate them in
devices like e-reader, payment terminals and notebooks.
The company said in a statement that it expected revenue of
between $98 million and $102 million in the first quarter.
Sierra, which sold part of its mobile broadband business to
Netgear Inc for $100 million last month, reiterated its
intention to use the proceeds for acquisitions in the
machine-to-machine business that enables data transfer.
After a first-quarter loss, the company expects solid
revenue growth in the second quarter of 2013, Chief Financial
Officer Dave McLennan said on a conference call with analysts.
The stock is currently trading at about 12 times analysts'
expectations for fiscal 2013 earnings, according to Thomson
"The company is setting a base for growth," said Avondale
Partners analyst John Bright. He identified short-term organic
growth of 10 percent to 15 percent, as well as acquisitions,
cost management and the buy-back of shares as the catalysts for
PROFIT BEATS ESTIMATES
Sierra earned $19.6 million, or 64 cents per share, in the
fourth quarter, compared with a loss of $13.8 million, or 44
cents per share, a year earlier.
Revenue from continued operations rose 33 percent to $109.4
million. Total revenue rose 11 percent to $163.8 million, buoyed
by a 40 percent sales increase in its machine-to-machine
On an adjusted basis, the company earned 33 cents per share,
much higher than the average analyst estimate of 20 cents per
share, according to Thomson Reuters I/B/E/S.
Sierra reported revenue of $15.5 million from the
machine-to-machine business acquired from France-based Sagemcom
in 2012. This was equivalent to 14 percent of the company's
total revenue in the fourth quarter.
Shares of Sierra, which has a market value of about $355
million, closed at C$11.60 on the Toronto Stock Exchange on