Sierra Wireless Updates Guidance For Second Quarter, Provides Preliminary Guidance for Third Quarter
Friday June 22, 5:11 pm Eastern Time
Press Release
biz.yahoo.com
VANCOUVER, BRITISH COLUMBIA--We are providing updated guidance for the second quarter and preliminary guidance for the third quarter.
For the second quarter ending June 30, we are reducing our revenue forecast from $24 million to a range of $18 million to $20 million. We expect gross margins in the 39% to 40% range, down from previous guidance of 42%. We expect operating expenses to be $9.0 million, approximately $500 thousand lower than our previous forecast of $9.5 million. We are reducing our net earnings forecast, before one-time charges, from earnings of $500 thousand to a loss of between $800 thousand and $1.5 million and our EPS forecast from $0.03 to a loss of between ($0.05) and ($0.09).
We have decided to take a one-time charge for excess inventory of $8 million and a one-time increase in our provision for doubtful accounts of $3 million, applied to the second quarter. After giving effect to these one-time charges, we expect to report a loss for the second quarter of between $11.8 million and $12.5 million, equating to EPS of between ($0.73) and ($0.78).
We have been monitoring risks associated with business and financial conditions at one of our wireless carrier customers, Metricom. Sales of Ricochet modems to Metricom and channel partners are meeting our expectations as are payments associated with these sales. We remain optimistic regarding the prospects for the Ricochet service, however, we note that Metricom is an emerging carrier currently undergoing a restructuring program and that Metricom has indicated they will soon require additional financing to continue operations.
``With the continued economic slowdown, customers and distribution channel partners are shortening order lead times and focusing on reducing inventory balances. Additionally, the rampup of volume shipments and market launch activities for the new AirPath 300 product are progressing more slowly than we expected. These changes are affecting our second quarter revenue outlook. We expect second quarter revenue to be comprised of a product mix weighted towards our lower gross margin products. Operating expense control measures are ahead of expectations, however, we do expect to record a loss for the quarter as a result of lower than expected revenues and the impact of the one-time charges, '' said David Sutcliffe, Chairman and Chief Executive Officer.
``Although lower than expectations, our current revenue outlook represents about 100% growth over the comparable period, growth that is gratifying given the difficult economic climate that we are operating in. Cash management is in line with expectations.''
``Our current revenue breakeven point is approximately $21 million, so we are already well positioned to be profitable as we grow revenues from current levels. We have curtailed operating expense growth while continuing our significant investments in new product development and in market development including our European expansion.''
``In the medium term, we have a strong order book with established wireless carriers including AT&T Wireless, Sprint PCS and Verizon Wireless for new products including CDMA 1XRTT PC Cards and GPRS PC Cards. Development of these new products is on schedule and we expect commercial shipments of these products to commence during the fourth quarter (CDMA) and by year end (GPRS).''
``Despite the short term economic challenges, we are aggressively executing our wireless data leadership strategy, developing Core Wireless Engines and focusing our business development activities on wirelessly enabling a broad range of computer and consumer electronics devices.''
For the third quarter ending September 30, we are providing preliminary guidance. We expect revenue of $21 million, net earnings of $100 thousand and EPS of $0.00.
Forward-Looking Statements
This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements relate to, among other things, plans and timing for the introduction or enhancement of our services and products, statements about future market conditions, supply and demand conditions, and other expectations, intentions and plans
contained in this press release that are not historical fact. Our expectations regarding future revenues depend upon our ability to manufacture and supply products which we do not
produce today and that meet defined specifications. When used in this press release, the words ``plan,'' ``expect,'' ``believe,'' and similar expressions generally identify
forward-looking statements. These statements reflect our current expectations. They are subject to a number of risks and uncertainties, including, but not limited to, changes in
technology and changes in the wireless data communications market. In light of the many risks and uncertainties surrounding the wireless data communications market, you should
understand that we cannot assure you that the forward-looking statements contained in this press release will be realized.
About Sierra Wireless
Sierra Wireless, Inc. is a leading provider of wireless data communications products. Sierra Wireless delivers wireless PC Cards for portable computers, wireless adapters for PDA's,
OEM modules for embedded applications and rugged vehicle-mounted wireless systems. Sierra Wireless is the founding member of the WirelessReady(tm) Alliance, an alliance of
industry-leading hardware, software and service companies committed to the delivery of complete and compelling wireless data solutions. For more information on Sierra Wireless,
visit its Web site at sierrawireless.com.
Conference Call and Instant Replay
We will host a conference call on Monday, June 25, 2001 at 6:00 am PDT, 9:00 am EDT. To participate in this conference call, please dial the following toll free number approximately
five minutes prior to the commencement of the call:
1-800-446-4472
Should you be unable to participate, Instant Replay will be available for 72 hours following the conference call by dialing:
1-888-509-0081
We look forward to having you participate in our call.
Contact:
Sierra Wireless Inc.
Peter W. Roberts, CA, CPA
Chief Financial Officer
(604) 231-1192
Email: roberts@sierrawireless.com
Website: www.sierrawireless.com |
