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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