Shares of Sierra Wireless Inc. (NASDAQ: SWIR) were down 15.9% as of 12:00 p.m. EST Friday after the Internet of Things (IoT) company announced strong fourth-quarter 2017 results, but followed them with weaker-than-expected guidance.
Continue Reading Below
More specifically on the former, quarterly revenue climbed 12.6% year over year to $183.5 million, which translated to adjusted net income of $9.2 million, or $0.28 per diluted share. Both figures compared favorably to the guidance Sierra Wireless provided last quarter, which called for revenue of $172 million to $180 million, and adjusted earnings per share of $0.21 to $0.29.
On a segment basis, Sierra Wireless' core OEM Solutions revenue climbed 3.4% year over year to $135.2 million; enterprise solutions sales grew 52% to $31.8 million, and IoT services revenue -- formerly called cloud and connectivity services -- jumped 73.5% to $11.9 million. The latter included $3.1 million in revenue from Sierra Wireless' acquisition of Numerex, which was completed in early December.
For the first quarter, however, Sierra Wireless expects revenue in the range of $181 million to $189 million, which should translate to adjusted earnings per share of $0.04 to $0.10. By comparison -- and though we don't usually pay close attention to Wall Street's near-term demands -- consensus estimates predicted first-quarter adjusted earnings of $0.20 per share on revenue near the high end of Sierra Wireless' guidance range.
To be fair, Sierra Wireless noted these results will be negatively impacted by unusual, mostly non-recurring items, including higher costs related to a Numerex network upgrade, as well as customer migration costs and tight component supply constraints.
In the end, shareholders can take solace in the fact that these acquisition-related headwinds should only affect Sierra Wireless' near-term results, and are not indicative of problems in the underlying business. But the stock market hates being told to effectively hurry up and wait, so it's no surprise to see shares pulling back today.
10 stocks we like better than Sierra WirelessWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Sierra Wireless wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of February 5, 2018