Sierra Wireless Update

By: ispeculatornew
Date posted: 11.29.2007 (12:23 am) | Write a Comment  (0 Comments)

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SWIR – Sierra Wireless (Nasdaq) (Closing Price – $16.71)

Sierra Wireless has reported two very nice quarters since my last update and the company has given strong guidance for the upcoming quarter. However, the stock price has sold off recently on competitive fears.

Sierra Wireless reported revenue of 107.4 million and earnings per diluted share of 0.25 in Q2 of 2007. Revenues were up almost 100% year over year and EPS was up 67% year over year. Revenues and earnings also improved considerably from the prior quarter.

In Q3 of 07 Sierra Wireless reported revenue of 111.5 million and diluted EPS of 0.33. Once again the financial numbers were huge improvements year over year and EPS rose nicely over the previous quarter.

For the upcoming quarter Sierra Wireless has given guidance for revenue of 125 million and EPS of 0.35. If they are able to make their numbers it will be another strong quarter. Also, Sierra Wireless usually beats the guidance they give so the numbers for next quarter could be even better.

So why has the stock price of Sierra Wireless dropped so much in the last month? Qualcomm introduced its new Gobi module which has caused concerns of increased competition for Sierra Wireless.

Analysts have given conflicting reports since Gobi was introduced so I don’t think anyone really knows how much influence Gobi will have. The unknown influence of Gobi and the weakness in the broader market has caused the stock price of Sierra Wireless to take an unjust fall.

However, I think if the stock price of Sierra Wireless has bottomed out and will go back up in anticipation of continued strong results. I would recommend to continue holding your shares of Sierra Wireless.

Disclaimer: I have no position in Sierra Wireless.

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