Why Sierra Wireless Inc. Shares Sank

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of wireless technologist Sierra Wireless  (NASDAQ: SWIR  ) plunged 10% today after its quarterly results and outlook disappointed Wall Street.

So what: The stock has soared over the past year on better than expected growth, but today's first-quarter results -- adjusted earnings per share of $0.02 missed the consensus by $0.01 despite a revenue increase of 19.5% -- are forcing analysts to scale back their expectations a bit. In fact, gross margin during the quarter declined 100 basis points to 31.9%, suggesting that the company's competitive position is weakening as well.

Now what: Management now sees second-quarter EPS of $0.06-$0.08 on revenue of $128 million-$131 million, versus the consensus of $0.09 and $123.5 million. "I believe we are well positioned for continued revenue growth and improving profitability in the second quarter and beyond," said President and CEO Jason Cohenour in a press release. "We continue to focus on driving profitable organic growth in M2M devices and cloud services, while pursuing additional strategic acquisitions." Given Sierra's rock-solid balance sheet and today's double-digit pullback, the stock's downside might be limited enough to buy into those prospects.

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Read/Post Comments (22) | Recommend This Article (39)

Comments from our Foolish Readers

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  • Report this Comment On May 07, 2014, at 12:46 PM, carolinagoose wrote:

    Talk about near term thoughts on SWIR. (next 6 months) Getting worried about my investment here

  • Report this Comment On May 07, 2014, at 1:24 PM, SATMAN wrote:

    Near term thoughts about SWIR are going to be hard to come by. Look at any stock near term and you will find that most have their ups and downs.

    Could this be a buying opportunity? I'll let you know in 2020.

  • Report this Comment On May 08, 2014, at 1:10 AM, funbuddy wrote:

    Consider current market condition, and a lot of companies buy back shares, I will buy some stocks like aapl, gild, and ua

  • Report this Comment On May 08, 2014, at 8:47 AM, coolsoupyII wrote:

    Did early investors in Apple panic?

  • Report this Comment On May 08, 2014, at 10:15 PM, dutchfool wrote:

    I am down 24% from my initial stock purchase but my investment philosophy is long term rather than short term. Based on MF's reports regarding SWIR, I am in it for the long haul.

  • Report this Comment On May 09, 2014, at 9:31 AM, rblazer75 wrote:

    Lets be clear .... 100 basis points is only 1%, come on now talk about spinning...

  • Report this Comment On May 13, 2014, at 5:38 AM, tertius13 wrote:

    This is one of the most innovative companies in their sphere. From a technology point of view they are right on the money.

    This stock will still bring us lots of joy in years to come !

  • Report this Comment On May 13, 2014, at 11:54 AM, parparpar wrote:

    This one looks like it is crashing and burning on the runway.

    I'll wait until the smoke clears to see what is left of my (substantial) position.

  • Report this Comment On May 13, 2014, at 1:07 PM, jmhiss wrote:

    Crashing and burning on the runway is a bit overly dramatic. Plane has taken off and encountered turbulence but what new growth stock doesn't. Nothing goes up straight line or even close. With growth stocks there will be serious uncomfortableness along the way to a better price per share

  • Report this Comment On May 13, 2014, at 1:54 PM, 1hitwonder wrote:

    this blunder looks more of a buying opportunity

  • Report this Comment On May 13, 2014, at 7:31 PM, hgraphic wrote:

    Case in point. I purchased shares of NXPI @ $22/share. The next day it dropped like a rock to $14/share.

    NXPI is at a whopping $60/share today.

    At least wait for it to come back up to your purchase price to sell

  • Report this Comment On May 14, 2014, at 4:33 PM, ghost2 wrote:

    you guys,- get in on the low priced sale of the century - if your not byin your dyin - dollar cost average down into the floor of the stock -- i'm hoping for one more correction down to the price Tim and Dave got in at around 15. - that's my prediction!

  • Report this Comment On May 15, 2014, at 10:34 AM, billyblitz wrote:

    One more correction down to 15 ? I jumped in at 25 in January and been nothing but frustrated since. Takes a better man than me to watch his investment sink deeper and deeper for five months and consider it a buying oportunity.

  • Report this Comment On May 15, 2014, at 10:54 AM, parparpar wrote:

    Ain't no fool like a motley fool.

  • Report this Comment On May 20, 2014, at 11:42 AM, ghost2 wrote:

    Ya got that right, friend! I'm silly too! I jumped in at 20 now worth less. Still waiting, show me the $

    soon or i may do the blitz.

  • Report this Comment On May 28, 2014, at 12:21 PM, pa1vette wrote:

    Im not happy with my position i got in at 21 then 23 then 19.20 and 19.08 and tis thing is still going down i will hold thru summer hope fall brings better performace,

  • Report this Comment On May 29, 2014, at 11:18 AM, byonnefool wrote:

    have been a follower for years, swir as a market leader in field could be acquisition target. up up and away. why don't you supposed investors set a reasonable sell price. This way you set a loss of 5-10 % and stop crying.

  • Report this Comment On May 31, 2014, at 1:32 AM, Martymus wrote:

    What happened to the BIG Announcement?

  • Report this Comment On June 04, 2014, at 10:24 AM, sf0589 wrote:

    what is David's recomendation now?

  • Report this Comment On June 04, 2014, at 10:45 AM, parparpar wrote:

    Doesn't the silence speak for itself?

  • Report this Comment On July 09, 2014, at 11:38 AM, Heidikitty wrote:

    I am loosing but I am holding as I sold out of a stock before when the Fool said buy and was sorry afterwards so I am betting on the Motley Fool.

    It is tough but I am holding. Just keep looking for results down the road.

  • Report this Comment On August 01, 2014, at 6:46 AM, FunnyMoney58 wrote:

    Hello to everyone on this "Foolish" site. This is my first time investing. I'm hoping to making a wise decision on this futuristic pick. Any advice would be greatly appreciated. Best wishes to all! SWIR looks to be a wise choice, so far.

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