Sierra Wireless won’t stand still in fight with Qualcomm

Sierra Wireless Inc. brushed aside speculation earlier this week that the company was going to suffer from slower sales as a result of Qualcomm Inc.'s decision to introduce a competing embedded wireless modem. Dave McLennan, CFO at the Vancouver-based outfit, said the entry of Qualcomm with its Gobi product will create more competition, but he discounted suggestions that Sierra Wireless is going to be hard-pressed to win anymore in the laptop OEM market. He noted that Qualcomm only entered this market in October while Sierra Wireless has deals with 12 laptop makers and 45 other vertical companies. "While I don't deny an intensifying competition, I also want to acknowledge that there's a lot of very interesting things happening around this space. I just don't' feel that we're driving off of a cliff in our OEM business in the latter part of 2008 depending on what happens or what doesn't happen with Gobi," he said during a presentation at Lehman Brothers' Global Technology Conference earlier this week. McLennan acknowledged that revenue from this business unit will largely end in the middle of 2008 but in some cases will continue to the end of next year. In October, Qualcomm introduced Gobi, a multimodal embedded wireless module that provides network connectivity over a range of wireless standards, including Wi-Fi, EvDO and HSPA. In the announcement, Qualcomm expected to have commercially available laptops embedded with Gobi by the middle of 2008. Despite the competitive threat that Qualcomm presents as the world leading provider of chips for CDMA cell phones, McLennan is confident in the success of Sierra Wireless. "We've got a strong franchise here and if we do experience pressure in our laptop OEM business. I think there's a lot of other interesting things going on in the vertical space that leads us to believe we can still grow our total OEM business in 2008," he said. "Competition is intensifying in our business but I think that needs to be balanced with the fact this business is a growth industry and I think we're well-positioned in the segments that we operate in to grow and take advantage of this strong market growth." Money for acquisitions raised Sierra Wireless, best known for its AirCard wide area wireless modems, raised $85 million earlier this fall through a share offering - money that will be used in large part to fund mergers and acquisitions. McLennan said the company is eyeing two particular areas for targets. The machine-to-machine, or M2M, business and the mobile computing market. M2M is attractive, according to the CFO, because it is less competitive, has good growth prospects and generates a higher gross margin. Sierra Wireless bolstered its M2M business earlier this year when it acquired Airlink Communications. On the mobile computing front, McLennan said the company is looking to add more solutions and applications to "augment our hardware sales."

Sierra Wireless won’t stand still in fight with Qualcomm

News | December 7, 2007

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