3G Slow Rollout hits Sierra Wireless


ac580.jpgSierra Wireless, the Canadian company that makes modem cards for connecting laptops to wireless cellular networks had a 3G reality check, as it missed its numbers by a mile and issued a guidance which had the investors scrambling for exits. Company sliced its revenue expectations for the first quarter by 67%. Fool.com has the wrap-up. Problem as indicated by the sharp increase in inventory is the slow rollout of 3G networks, not only in US but also in Europe and other parts of the world. Moreover there is competition in the form of Kyocera and Novotel while its Voq smartphone has been moving with the speed of a geriatric. Sierra makes EV-DO modems which are dependent on how quickly companies like Verizon and Sprint roll out their 3G networks. Barry Richards, a wireless analyst with Paradigm Capital Inc., in an interview with The Globe & Mail described Sierra’s forecast as “abysmal,” and pointed out that it was “difficult to even imagine that this much business could disappear in one quarter.” He said the source of Sierra’s problems was a combination of an inventory buildup on new products, a high revenue concentration at Verizon Wireless, and product transitions delaying purchasing decisions.

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