Sierra Wireless Reports Second Quarter 2001 Results
VANCOUVER, B.C.--(BUSINESS WIRE)--July 16, 2001--Sierra Wireless (NASDAQ:SWIR) (TSE:SW.)
We are reporting revenue of $16.0 million and an operating loss for the second quarter of 2001. Our results are reported in US dollars.
As previously announced, we are recording charges to the second quarter of 2001 to provide for excess inventory and doubtful accounts. In the corresponding quarter of 2000, we had charges related to the acquisition of the Qualcomm CDMA data modules business. The proforma information provided in this release is net of these charges.
Our revenue for the three months ended June 30, 2001 amounted to $16.0 million compared to $9.4 million in the second quarter of 2000, an increase of 70%. These revenues included significant growth in our AirCard products.
Our gross margins amounted to ($3.9) million for the second quarter of 2001 compared to $4.4 million for the second quarter in 2000. Gross margins were adversely affected by a $10.0 million provision for excess inventory. Our proforma gross margins were $6.1 million compared to $4.4 million in the comparable quarter. Our proforma gross margin percentage was 37.9% compared to 46.7% in the comparable quarter. The change in gross margin percentage is a result of changes in product mix, new product costs and volume pricing arrangements.
Our total operating expenses for the second quarter of 2001 amounted to $12.7 million compared to $7.8 million in the second quarter of 2000. Operating expenses were increased by a $3.0 million increase in the allowance for doubtful accounts. Our proforma operating expenses were $9.7 million compared to $6.8 million in the comparable quarter. Our gross research and development investments were $4.9 million compared to $4.1 million in the comparable quarter.
Our net loss was $16.0 million for the second quarter of 2001 compared to a net loss of $2.6 million in the second quarter of 2000. Our proforma net loss was $3.0 million for the second quarter of 2001 compared to $1.8 million in the comparable quarter.
Our basic and diluted loss per share amounted to $0.99 for the second quarter of 2001 compared to a basic and diluted loss per share of $0.17 in the second quarter of 2000. Our proforma basic and diluted loss per share amounted to $0.18 compared to $0.12 in the comparable quarter.
One of our customers, Metricom, has refused further shipments and has filed for a Chapter 11 reorganization. These developments occurred subsequent to our June 22 guidance update, reducing our expected second quarter revenue and gross margin and increasing expected excess inventory and losses. Our Metricom supply agreement provided for Sierra Wireless AirCard 400 shipments of $33 million over a twelve month period that commenced in March 2001. Revenue to date is approximately $4.5 million and we consider all of the remaining product volume commitment to be in doubt. Our provisions for excess inventory and doubtful accounts are sufficient to cover all of our known Metricom exposures. We note that the Ricochet network and service continue to be operated and marketed.
"As a result of the Metricom default, second quarter revenues are lower than expected. Despite this, our revenue grew 70% over the comparable period, growth that is gratifying given the difficult economic climate that we are operating in," said David Sutcliffe, Chairman and Chief Executive Officer.
"In light of lower than expected revenues and the resulting operating losses, we are reducing our operating and capital expenditures. Total staffing is being reduced from 290 to 260 people. We are 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."
Second Quarter Highlights Included:
- We announced the addition of Sprint PCS, BlueKite.com and OmniSky Corporation as members of the WirelessReady(tm) Alliance.
- We announced the availability of the Sierra Wireless AirCard(r) 300 for Internet use on the TELUS Mobility Cellular Digital Packet Data (CDPD) network.
- We teamed with GoAmerica Inc. to offer the Sierra Wireless AirCard(r) 400 for the Ricochet 128 kbps network. The Sierra Wireless AirCard 400(r) is the first wide-area wireless network interface card for the Ricochet network that can be used with laptops, Internet appliances and Pocket PCs with a PCMCIA Type II slot.
- We and other wireless technology partners participated in the 12-city Mobile Theater road show. We presented local business decision makers an end-to-end perspective of mobile computing, along with fellow WirelessReady(tm) Alliance members such as Casio, Compaq, GoAmerica, Hewlett-Packard, Microsoft Corp. and NetMotion Wireless.
- We appointed Derek Evans as our Vice President of Distribution for Europe. Mr. Evans is responsible for leading our market entry initiatives in Europe including distribution, sales, business development and technical support. Mr. Evans has over 20 years of experience working within blue chip European companies in the wireless, telecommunications and consumer electronics industries.
- We entered into an agreement with Brightpoint North America, L.P., a subsidiary of Brightpoint, Inc., to distribute Sierra Wireless data modems and software products to wireless carriers, retailers and value added resellers in the United States.
- We have established a strategic relationship with Citrix Systems, Inc. to deliver business applications running on Citrix(r) MetaFrameTM servers over wireless networks to users on virtually any client device. Citrix MetaFrame software supports the Sierra Wireless AirCard(r) 300, 400 and 510 wireless network cards and will support future Sierra Wireless AirCard products.
- We announced the development of the Sierra Wireless CDMA 1xRTT Embedded Module, to be commercially available in the fourth quarter of 2001. The CDMA 1xRTT Embedded Module will be a dual band wireless modem, operating at speeds of up to 153.6 kbps, supporting 1xRTT, IS95A and IS95B protocols for maximum connective flexibility and equipped to handle high-quality, reliable voice and data communications.
- Fujitsu PC Corporation announced the selection of Sierra Wireless as its preferred supplier of wireless wide-area network hardware solutions. As part of Fujitsu's wireless initiative, the Sierra Wireless AirCard(r) 300 and Sierra Wireless AirCard(r) 400 network interface cards will be available as connectivity solutions for Fujitsu's award-winning line of LifeBook(tm) notebook and Stylistic(tm) pen tablet PCs.
- We announced commercial availability of the Sierra Wireless AirPath(tm) 300 wireless adapter which enables wireless data access for the Handspring(tm) Visor(tm) handheld computer. The solution offers mobile users flexibility and a variety of wireless network options on their handheld computer or personal digital assistant through CDPD networks. Financial Guidance
For the third quarter ending September 30, we are providing updated guidance to reflect the Metricom default and current business indicators. We expect revenue of $12.5 million, net losses of $4.0 million and a loss per share of $0.25. These figures include the costs associated with reducing staffing.
For the fourth quarter ending December 31, we expect revenues to increase significantly with the commencement of commercial volume shipments of our new products to established wireless carriers. We expect operating expenses to be lower and the bottom line to reflect these improving revenue and expense trends.
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. |
