3SOF

From Briefing.com:
Lehman says SWIR prepping for acquisition; move is positive

20-Sep-07
SWIR Sierra Wireless: Prepping for acquisitions - Lehman (23.71 ) -Update-

Lehman notes SWIR's capital raise of $78 mln suggests mgmt is prepping for potential acquisitions in order to broaden its addressable mkt and/or further diversify. They consider both a strategic positive, though dependent on the target. Firm believes SWIR is evaluating several potential candidates to either diversify its biz (i.e. M2M) or move upstream in core opps (i.e. software), similar in size and scope to its recent AirLink acquisition. Firm does not, however, consider a deal imminent, though one may occur in the next 12-18 months.

&

Bought Deal Sinks Sierra Wireless; Acquisitions Expected
Dow Jones Newswires - September 20, 2007 3:23 PM ET
By Stuart Weinberg

TORONTO (Dow Jones)--Shares of Sierra Wireless Inc. (SWIR) are down 4.6% as the Street rejigged its earnings forecasts to factor in dilution from Wednesday's bought-deal announcement. As reported, Sierra said late Wednesday it plans to raise US$78.4 million through the sale of 3.5 million shares at US$22.40 a share. The deal includes an overallotment option for an additional 525,000 shares, which could bring Sierra an additional US$11.8 million. CIBC World Markets is leading the underwriting syndicate, which also includes Piper Jaffray and RBC Capital Markets. The move was a surprise because Sierra doesn't need the cash, analysts said. The Vancouver company ended its second quarter on June 30 with US$90.1 million in cash and short-term investments. In its press release Wednesday announcing the deal, Sierra included the standard boilerplate saying that net proceeds from the offering will be used for general corporate purposes, working capital and potential future acquisitions.

Dev Bhangui, analyst at Haywood Securities, had little doubt what the funds will be used for. "This is specifically meant for acquisitions," he said. Bhangui said he believes future Sierra acquisitions will be similar to, or slightly larger in size than, the firm's acquisition of AirLink Communications in March. Sierra paid US$11 million for AirLink and issued 1.3 million shares to pay for the transaction. The purchase moved Sierra into the machine-to-machine, or M2M, market, a high-margin business that helped Sierra diversify away from its core PC Card and embedded-module businesses. M2M refers to technology that allows communication between machines. Scotia Capital's Gus Papageorgiou said in a note Thursday that he believes future Sierra acquisitions could also come in the M2M sector, or in the embedded-module space.

long and strong
Oliver

Thanks for those analyst's reports La-onda, they'll probably help SWIR recover from yesterday's "not so bad" 4.5% decline.

If the cash from the private placement is used for accretive acquisitions then it was worth it. I have just 8% net profit margin in my valuation model estimates, could it be more? I hope so, 8% is still kind of low for a high tech company.

I'll keep holding SWIR.

So far I've owned SWIR just as an extension of NVTL, since both companies products are similar, but as I read the following I want to learn more about this machine-to-machine communications market:

QuoteThe purchase moved Sierra into the machine-to-machine, or M2M, market, a high-margin business that helped Sierra diversify away from its core PC Card and embedded-module businesses. M2M refers to technology that allows communication between machines.

I'll study that for the next update.

SWIR went down 0.5% on Friday, still reacting to the private placement announced on Thursday. I think this is just a small setback and the stock will close the year around $30. Anyway, I still need to correct my valuation model, I'll also do that tomorrow.

I'll keep holding SWIR.

I have forgotten this one 
Sierra Wireless "overweight," estimates reduced

Thursday, September 20, 2007 12:35:37 PM ET
Lehman Brothers

NEW YORK, September 20 (newratings.com) - Analyst Jeff Kvaal of Lehman Brothers maintains his "overweight" rating on Sierra Wireless Inc (SWIR.NAS), while reducing his estimates for the company. The target price is set to $32.

In a research note published this morning, the analyst mentions that the capital increase of $78 million by Sierra Wireless indicates that it is making preparations for possible acquisitions in order to diversify its business and widen its market. The timing of the capital raise indicates that Sierra Wireless' 3Q prospects are bright, the analyst says. The EPS estimates for 2007 and 2008 have been reduced from $1.06 to $1.05 and from $1.40 to $1.32, respectively, to reflect the approximately 5%-7% dilution.

cheers from SGP
O.

Telstra launches Sierra Wireless HSPA products in Australia

Sep 24, 2007 21:00:00 (ET)


VANCOUVER and SYDNEY, Australia, Sept 25, 2007 /PRNewswire-FirstCall via COMTEX/ -- Sierra Wireless (NASDAQ: SWIR - TSX: SW) and Telstra today announced that the Sierra Wireless AirCard(R, Trade ) 880U USB modem and the AirCard 880E ExpressCard are now commercially available in Australia to provide high-speed mobile access to Telstra's Next G(TM) HSPA network.

With the Sierra Wireless AirCard 880U USB modem and AirCard 880E ExpressCard operating on Telstra's Next G HSPA network, customers will be able to send email attachments, upload information, and transmit data at peak network speeds up to 1.9 megabits per second (Mbps) - significantly faster than was possible with earlier network technologies. This improvement in uplink speed, combined with peak network downlink speeds of up to 7.2 Mbps, allows for new applications such as web conferencing and live video, and significantly improves the user experience for customers working over a virtual private network.

Telstra will market the Sierra Wireless AirCard 880E as the Telstra Turbo 7 Series Express Card and BigPond Wireless Broadband 7.2 Mobile Card. The Sierra Wireless AirCard 880U will be marketed as the Telstra Turbo 7 Series Modem and BigPond Wireless Broadband USB Mobile Card.

Telstra's Next G(TM) network upgrade will also benefit customers operating an AirCard 875 PC card, which can be upgraded to take advantage of the increased downlink speed with a simple firmware update.

"The move to HSPA technology offers great benefits for mobile data customers, who will find that the significantly improved upload speed available makes sending large email attachments, for example, to be much faster," said Dan Schieler, senior vice president, Worldwide Sales for Sierra Wireless. "Telstra has shown extraordinary market leadership in quickly transitioning to new wireless technology, and we are pleased to support its deployment of HSPA and to continue to improve the mobile broadband experience for customers in Australia."

Holly Kramer, Group Managing Director, Telstra Product Management said, "Telstra is pleased to be partnering with Sierra Wireless to launch the first 7.2 data cards in the Australian market, bringing the benefits of the fastest national mobile broadband network to 98.8 percent of the Australian population."

The AirCard 880U USB modem and the AirCard 880E ExpressCard are fully compatible with HSPA, UMTS, EDGE, GPRS, and GSM network technologies on all frequencies currently used worldwide. To ensure there is always enough power support to handle peak or fringe area transmission requirements without compromising performance, the AirCard 880U USB modem includes an internal battery that supplements the power from the USB port when extra power is required.

I made some changes at my valuation model from SWIR, considering the dilution coming from the recent private placement and expecting management to make an accretive to earnings acquisition.

I've increased the dilution factor to 4% a year from 1% a year, but I've also raised my revenue CAGR estimate from 70% a year to 75% and my net profit margin estimate from 8% to 9%. The final result was that the optimal selling price rose from about $51 to about $54.

These estimates also consider that management takes actions (like the private placement) to increase shareholder's value over the long term, not to reduce it.

There was a not so relevant (for the share price) press release out from the company today (thanks for posting Garoh):

• Telstra launches Sierra Wireless HSPA products in Australia
PR Newswire (Mon 9:00pm)

One thing worth mentioning is the following:

«Holly Kramer, Group Managing Director, Telstra Product Management said, "Telstra is pleased to be partnering with Sierra Wireless to launch the first 7.2 data cards in the Australian market, bringing the benefits of the fastest national mobile broadband network to 98.8 percent of the Australian population."»

Today it is 7.2, next 8.2, then 9.2, whatever the numbers are, there's a constant need for upgrading the equipment, which means today's consumers will probably consume more of the company's products two or three years from now. It's not something you buy once, you'll keep on buying, just like computers and mobile phones keep improving. This is why NVTL and SWIR are businesses which will be here over the long term.

As for yesterday's decline, it wasn't company specific, it was because of the general market weakness, in the same way we've talked about in NVTL's thread, the multiple expansion/contraction phenomenon. However, after today's possible weak open, I expect a very strong rally to new highs in the S&P 500, and that should also drive SWIR up (more than the S&P 500).

I'll keep holding SWIR for the long term.

buenos dias!
good morning!
David I agree I think it looks like its definately a good day to  buy at least according to the chart.
p.s. I am not a technitian I just learned this thing about rsi2 and fast stochastics in this forum.

fyi DAvid:
SWIR: Short Interest UP 60.2% to 2.2M in Sep 2007
Tuesday , September 25, 2007 16:20ET

According to new short interest data from NASDAQ, short interest for Sierra Wireless, Incorporated (NasdaqNM: SWIR) INCREASED 60.2% to 2,210,754 shares for the month ended mid-September, 2007.

SYMBOL      AUGUST       SEPTEMBER          CHANGE       %CHANGE        DAYS/COVER
--------   -------------   -------------   -------------  ------------  ----------
SWIR           1,380,335       2,210,754        +830,419       +60.16%           6

Based on SWIR's 20-day average daily share volume of 409,815, it would require approximately 6 day(s) of buying to cover this short interest.

Thanks for the info la-onda. SWIR closed above the open yesterday, on volume above average, so I guess smart investors are buying on this dip. I'll hold SWIR.

SWIR still didn't say why it wanted those $78 M, but people are speculating it's for acquisition, since the company didn't need the money for working capital purposes. The stock seems to have found a floor. I'll keep holding SWIR.

Swir today's problem child? Nvtl also for that matter.

Quote from: soxguy on September 27, 2007, 10:38:50 AM
Swir today's problem child? Nvtl also for that matter.

Yes, they were both weak yesterday, I don't know why. I guess it will take analysts looking at 2008 numbers, or the company providing guidance to change things over the short term.

Anyway, I'm a believer in that study showing 53% CAGR between now and 2012 in these companies' industry, so I'll continue holding SWIR for the long term.

swir and nvtl weak again on no news. if and when it comes,i hope theycan recover.

Quote from: soxguy on September 28, 2007, 09:49:50 AM
swir and nvtl weak again on no news. if and when it comes,i hope theycan recover.

Yeah, it has been a though market for these two lately. SWIR's reason seems to be the private placement they made ... investors didn't like that. The sooner they say what was the money for, the better. I'm pretty much sure they'll announce an acquisition sooner or later, because the balance sheet didn't show any short term liquidity needs.

But the big deal will be when/if they raise 2008 guidance, because I don't believe there's going to be just 20% growth, after a 258% revenue growth in 2007 from the 2006 level. I just don't.

I'll hold SWIR for the long term. 

Stupid SWIR is really nose-diving, it makes me sick.

But if I calm down a bit and think about what I've just heard at the Jefferies conference from NVTL, saying "all product categories are growing very rapidly" and watch how the volume is increasing as the price goes down, meaning the lower prices are attracting new buyers, I see this weakness as a buying opportunity, which I would take if I haven't already bought.

Then if I start thinking about people preferring mobile internet as their first choice for connectivity and the 53% CAGR these products will probably have between now and 2012, then I enter a sea of calmness, without a doubt in my mind that the correct thing to do is to hold SWIR with strong hands for the long term. I'll do the correct thing.