Proving the Business Case for the Internet of Things

Demand for 3G, 4G modules boosts Sierra Wireless earnings

Iain Morris
May 7, 2014
 
Sierra Wireless has flagged growth in sales and earnings for the first quarter of 2014 thanks to strong demand for its 3G and 4G embedded modules among customers in the automotive, energy, networking and mobile computing sectors.

The company saw revenues increase by 19.5%, to $121.2 million, compared with the same period last year, while earnings before interest, taxation, depreciation and amortization more than doubled to $4.1 million from $1.8 million in the first quarter of 2013.

Although Sierra Wireless (Richmond, Canada) still registered a net loss, it had shrunk from $6.1 million to $4 million over the same period.

Speaking to analysts on the company’s earnings call, Jason Cohenour, the chief executive and president, said most of the growth was organic but noted a “modest revenue contribution” from the recently acquired AnyDATA and In Motion businesses.

Sierra Wireless agreed a $5.9 million takeover of South Korea’s AnyDATA in October 2013, saying the move would boost its presence in South Korea and reinforce its leading position in the global market for cellular M2M embedded modules.

Meanwhile, the $21 million acquisition of In Motion in January this year was aimed at strengthening the company’s position in the transit and commercial fleet markets, for which In Motion develops in-vehicle mobile routers and security and management software.

Cohenour said the integration of AnyDATA and In Motion was “well under way”.

Sierra Wireless is betting that M2M business will migrate from legacy 2G technologies to 3G and 4G systems over time, and Cohenour attributed the revenue gains chiefly to the company’s leadership position in the 3G and 4G areas.

He also indicated that Sierra Wireless has been investing heavily in Legato – a next-generation Linux-based platform that is intended to help developers get applications “up and running fast”.

Cohenour said Legato would be pre-installed on all new smart modules from Sierra Wireless from later this year.

Executives also indicated they remain keen on growing the business through further acquisitions, with Dave McLennan, the company’s chief financial officer, noting that a strong cash balance of $151.3 million at the end of the first quarter put Sierra Wireless in a good position to continue with its M&A strategy.

Sierra Wireless is forecasting organic revenue growth of 13% in the second quarter and net earnings from continuing operations of between $1.9 million and $2.5 million.
 
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