Shares of the IT solutions provider Sierra Wireless have risen in price
Last week, Sierra Wireless Inc. (SWIR) shares rose in price and increased by 30% since the beginning of the year, to $18.9 at auction on November 14.
The company is under pressure from supply chain issues, but its third-quarter results were better than expected. However, the financial indicators of the past quarter do not look favorable.
Sierra Wireless’s revenue fell 27% year-on-year to $82.5 million. The loss amounted to $0.56 per share, cash and cash equivalents of $75.5 million. The gross margin decreased to 29.3%, compared to 34.8% in Q3 2020. The company lacks components, part of the production capacity is not loaded — the factory in Vietnam is closed due to COVID-19.
The company could not deliver equipment for corporate networks to customers, and the backlog of outstanding orders (backlog) reached a record high. However, the results were better than Wall Street’s expectations, and there is still an increased demand for Sierra Wireless solutions.
To solve the current problems, Sierra Wireless is preparing to launch new production lines at a factory in Mexico, which will allow faster production of new routers for American corporate customers. A gradual increase in supply volumes will enable revenue to increase to $120-135 million in the fourth quarter — with the potential for sales growth in 2022.
The company’s management expects to maintain a positive background due to the continued deployment of 5G networks, mobile IoT, and local private wireless networks. In addition, Sierra Wireless has competitive solutions, such as cloud routers and a first-of-its-kind multi-network router with 5G support for connected cars.
Thus, some uncertainty remains for Sierra Wireless, but the company remains one of the technological leaders in the segment of electronics for communications.
