TRADER DAVE & ALL, PMCS spins off wireless unit. Have fun. I just
got in. See, the last paragraph.
Sierra plans to take wireless data transfer to new level
Drew Hasselback
Financial Post (Hot Stock section May 27,99)
VANCOUVER - Sierra Wireless Inc. has received a $64.1-million reply to the message it sent to the
marketplace.
The company, based in the Vancouver suburb of Richmond, recently completed its initial public offering and
will use the lion's share of the funds to expand its share of the ever growing wireless data communications
market.
Sierra shares (SW/TSE) traded between $14.50 and $14.20 in the grey market before they officially began
trading on the Toronto Stock Exchange on May 17 at $14.25. They then lost a little ground but rebounded to
close 40¢ higher yesterday at $14.05.
The firm's move into public markets puts yet another British Columbia-based firm in the race to grab a piece
of the wireless market.
Infowave Wireless Messaging Inc., of Burnaby, B.C., recently announced a deal to market its wireless
software through a service pitched by Wireless Knowledge LLC, a joint venture put together by Microsoft
Corp. and Qualicomm Inc.
But while Infowave makes software, Sierra makes hardware. The company's AirCard modem, for example,
slips into laptop computers, allowing them to transfer data over cellular phone networks without the need to
plug the computer into a traditional, land based phone jack.
As laptop and palmtop computers become as much a part of the part of the mobile office as portable
telephones, the question arises whether wireless data communications will become the next big thing.
Not that the technology is all that new. The squelch and squawk of the two-way radio that used to be part of
the taxi cab experience is now being replaced by the buzzes, beeps and whines announcing the arrival of
incoming text messages on the tiny green screens. Police use wireless data to connect the laptops in their
cruisers with a server containing driving records. E-mail can now be delivered to pagers.
But companies like Sierra want to take wireless data transfer to a whole new level. It wants you to use
wireless communications for more than just email. It wants you to link everything stored on your laptop with
the server back at the office.
The pitch is that this will be of immense help to mobile sales people. The orders they enter into their laptops
will be directly linked to home base. There will be no need to scour hotels for modem friendly phone lines.
Products will be shipped, inventory will be adjusted, accounting will be updated -- all through the commands
typed into the remote computer.
Sierra's prospectus cites a study by the Yankee Group that forecasts the wireless data market will rise to
more than 12 million users in 2002, from a present level of three million users.
Peter Roberts, Sierra's chief financial officer, said the Yankee Group forecast looks only at business users in
major markets. At some point, the technology could become cheap enough and prevalent enough to move into
the consumer market.
Wireless modems transfer data at 19.2 kilobits per second, a rate which is a little slow when it comes to
downloading fancy Web pages stuffed with graphics, but fine for vanilla text.
Of course, it takes money to grow. In its IPO, Sierra offered to sell 4.5 million shares, with co-founders
PMC-Sierra Inc., of Burnaby, B.C., selling 1.5 million shares and Telxon Corp. of Akron, Ohio, selling
167,000 shares.
Selling shareholders took $22.3-million and underwriters, which included ScotiaMcLeod Inc., RBC Dominion
Securities Inc., CIBC World Markets Inc. and TD Securities Inc., took $3.8-million.
Of the remaining $38-million, Sierra says $12-million will go to research and development, $6-million to sales
and marketing, and $18-million for general corporate purposes, including possible acquisitions.
The post-IPO ownership holdings leaves management and employees in control of about 17% of outstanding
shares.
PMC-Sierra retains about a 26% stake in the company while Scotia Merchant Capital Corp. holds a 19%
stake.
SIERRA WIRELESS INC.:
CEO: David Sutcliffe |
