VANCOUVER, Canada-The consequences of Metricom Inc.’s bankruptcy continue to ripple through the wireless industry, most recently forcing a serious drop in revenues for wireless modem maker Sierra Wireless Inc.
The company announced its second-quarter results, ended June 30, showing revenues of $16 million-well below the company’s already lowered expectations-and the loss of a $33 million sales contract with the bankrupt wireless carrier. Sierra Wireless said it received $4.5 million of the $33 million, but that the rest of the money was “in doubt.”
Metricom’s Chapter 11 filing also caused Sierra Wireless to again lower its revenue expectations for the coming year. In June, the company said it expected revenues of $21 million for the third quarter, but now almost halved that outlook to $12.5 million. Sierra Wireless also said it will cut its work force by 30 positions, dropping its total employee count to 260 workers.
Investors reacted quickly to the news, sending the company’s stock down almost 16 percent in trading, from $13.69 per share to $12.16 in midafternoon trading.
Other casualties of Metricom’s bankruptcy include wireless network builder Wireless Facilities Inc., which said earlier this month it will take a $13 million charge in the second quarter.
While the situation is grim for Sierra Wireless now, the company said it expects business to pick up by the end of the year due to modem sales associated with the rollout of new CDMA 1xRTT and GPRS networks. Analyst firm BMO Nesbitt Burns echoed the company’s comments and said it will maintain its “Market Perform” rating.
