Sierra Wireless Inc. announced it will abandon its attempt at the smart-phone business after a miserable outing with its first product, the Voq Professional Phone. Sierra said it will either divest its Voq business or simply terminate it.
Investors reacted with apparent relief, sending the company’s stock up more than 11 percent on the news to around $8.94 per share. Sierra has been trying to sell the Voq for about a year and a half and has little to show for its efforts. No major carrier sells the device. The company did not release Voq sales figures.
“These actions are designed to focus the company on the core areas of our business where we have extensive experience and a well-established market position. We believe that both the PC Card and Embedded Module markets represent significant growth opportunities with the highest potential returns in our portfolio. Our goal is to ensure that we have a strong, sustainable leadership position in these areas,” said David Sutcliffe, the company’s president and chief executive officer. “We have enjoyed limited success to date on the Voq Professional Phone and have concluded that continuing to proceed with Voq is no longer the best use of our resources, given our other opportunities. We will now seek the most effective exit, whether by divestiture or by termination of the initiative.”
Sierra said its Voq business totals about $15 million. The company employs 319 people, 55 of which work directly on the smart phone. The company said 15 of those employees would move to other areas within Sierra, and the rest would “remain on Voq during the Voq exit process.” The company did not outline the restructuring charges associated with its exit from the smart-phone market. Sierra said 99 percent of its revenues come from its PC Card, Embedded Module and Rugged Mobile product lines.
Sierra announced the Voq in October 2003, a move that put the company up against smart-phone players like Hewlett-Packard Co., Nokia Corp. and PalmOne Inc. Investors cheered the company at the time, sending its stock up almost 9 percent to $18.01 per share following the news.
The GPRS/GSM Voq uses Microsoft Corp.’s Smartphone 2003 operating system, a 200 MHz Intel Corp. processor and 48 MB of ROM and 32 MB of RAM. It also features a SD/MMC card slot and a USB port. The device’s most notable attribute is a flip-open keyboard. Sierra in January announced it would stick with the product and introduce an HSDPA-capable Voq in the first half of next year.
