Sierra Wireless shares tumble on weak forecast

Shares of Sierra Wireless Inc. tumbled Thursday after the Canadian wireless modem maker issued a disappointing third-quarter outlook, saying it expects sales of embedded products to PC makers to erode.

Sierra Wireless on Wednesday forecast adjusted earnings of 32 cents per share, and sales of $140 million for the current quarter.

Analysts, on average, are expecting higher earnings of 37 cents per share on sales of $157.2 million, according to a poll by Thomson Financial.

Avondale Partners analyst John Bright downgraded Sierra to "Market Perform" from "Market Outperform." He called the second quarter's results "solid," but said the guidance is "distinctly negative," as new entrants into the PC embedded module market, Qualcomm Inc. and Sweden's LM Ericsson, are increasing competition.

"After several quarters of taking market share from competitors, we believe that the sands are now shifting against SWIR, and that competitive pressure will only mount in coming quarters," the analyst wrote in a note to investors.

The company also cited economic pressures for its cautious outlook.

Shares fell $2.82, or 17.6 percent, to $13.25 Thursday. In the past 52 weeks, the stock has traded between $11.98 and $27.86.

Shares of rival Novatel Wireless Inc. fell 67 cents, or 6.5 percent, to end at $9.66. The stock has traded between $7.42 and $27.29 in the past year.