Shares of Sierra Wireless (NASDAQ:SWIR) have gained as much as 5% today after the company reported second-quarter earnings. The stock has since given up some of that ground and is up just 2% as of 2:15 p.m. EDT.
Revenue in the second quarter declined by 25% to $144.1 million, which translated into an adjusted net loss of $11.1 million, or $0.30 per share. That bottom-line result was better than the $0.35 per share in adjusted losses that analysts were expecting.
"We continue to improve the Company's operating efficiency and drive focus toward being the global leader in fully integrated IoT solutions, showcased by our recently announced divestiture in the embedded automobile business," CEO Kent Thexton said in a statement. "Despite a challenging environment given the COVID-19 pandemic, our Second Quarter results met our expectations and we are cautiously optimistic about the second half of the year as we are seeing some business improvements as we prepare for an upcoming launch of our new 5G embedded modules and routers."
After the quarter ended, Sierra Wireless had announced an agreement to sell off its automotive embedded module product business for $165 million to a consortium led by China-based Fibocom Wireless. The divestiture will allow Sierra Wireless to better focus on its embedded broadband business. That deal is expected to close in the fourth quarter.
The sale will strengthen the balance sheet, and Sierra Wireless also amended a revolver during the quarter to increase borrowing capacity from $30 million to $50 million. The company did not provide guidance due to ongoing uncertainty related to the coronavirus pandemic, but said it was working to reduce operating expenses by $20 million.