Sierra Wireless, Inc. (SWIR)

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Sierra Wireless, Inc. (SWIR)

UBS Global Technology and Services Conference Call

November 15, 2012 2:30 pm ET


Jason W. Cohenour – Chief Executive Officer


Amitabh Passi – UBS Securities LLC


Amitabh Passi – UBS Securities LLC

Okay thank you everybody. My name is Amitabh Passi. I’m the Networking Supply Chain Analyst at UBS. Thanks. It’s my pleasure to welcome Sierra Wireless and presenting on behalf of Sierra Wireless is Jason Cohenour, the Chief Executive Officer. Thanks Jason.

Jason W. Cohenour

Good afternoon everybody. Spread out make yourself comfortable. You’ll begin hearing me over the echo. Anyway thanks for taking some time to learn a bit more about Sierra Wireless.

As you would expect today’s presentation is covered by the company’s safe harbor statement. You can speed read that or visit our website afterwards and get the full meal deal. So, a bit about us. So we are a global leader in providing wireless solutions to a couple of what we think are very interesting growth markets, machine to machine and mobile computing, very broad product line up predominately hardware, but a growing footprint in software and services that we produce to service these two target markets. And a team of guys who is very, very familiar and deepened the technology of wireless standards from 2G up to 4G and in particular embedded firmware and solutions as well.

LTM revenue were about $630 million, got about 1000 people in the company, half of that is R&D and we’ve got pretty strong R&D presence in Europe, North America and in Asia, and we manufacture in China.

So our vision is, we are enabling this connected world, you probably heard of bunch of talking heads talking about this opportunity but it’s often referred to as the Internet of things and you see it on television from Cisco the next 50 billion devices. We are really focused on enabling this vision of a connected world where in the fullness of time anything, any device in our lives they can benefit from our connection will indeed be connected. And we embrace this because well we’re doing it. Our devices today are shipped well in to the millions and you find our devices inside smart meters, connected cars, electric vehicle charging stations, wind farms, coffee machines you name it. And in everyday candidly it seems like there is a new kind of device to be connected to our network and on the back-end some cloud service or enterprise applications. So this is what we are chasing and we are chasing these two markets with very distinct strategies in our two lines of business, so we treat machine-to-machine quite differently than we treat mobile computing.

So what’s machine-to-machine, well for us machine to machine is collection of products. They are packaged, embeddable wireless devices, cellular devices, 2G right up to 4G that our customers take and sought it down on their PCVs or do a pin to pin connection inside their device and their factory and they create a solution whether it’s a smart meter or a car and deliver to their marketplace.

Also included here are we make industrial gateways and routers that you will find in the trunks of top cars or in smart grid deployments and we also provide cloud services that link basically link the machines in a customers environment back to enterprise applications.

So in this space we are focused on global leadership. We are playing to win, investing to win. We are building on our number one share position and we are focused on value chain expansion. So leadership and value chain expansion is the mantra for us in machine-to-machine. When I talked about a value chain expansion, the M2M value chain is very complex, lots of different links in the chain and what we’re focused on is taking more of those links in the chains and delivering that directly to our customers, including cloud services and in some cases even wireless services.

So mobile computing on the other hand, we are profitably maximizing. We are very focused on a core set of customers. We’re not making a lot of speculative investments in this space. In this business, we make wireless or mobile hotspots, somebody who called the MiFi, I hate when you do that, because that’s a competitor’s brand name. And also the USB dongles, those are what we call our AirCard products we make those for operators. And in this business line, we have also sale embedded modules to Tablet and PC OEM. So this is what we call mobile computing.

And again very focus, if you look at our AirCard product line, AT&T, Sprint and Telstra stop drive roadmap. These are the guys that drive our business in our roadmap for AirCards. We have more customers on those three. But we don’t make speculative investments believing or diluting ourselves that after $10 million of spend will break into Vodafone in a big way.

So controlling OpEx, running this line of the business very profitable, and both lines of business get a lot of leverage out of common core capabilities in the company by including a supply chain as you would expect. So we run one single supply chain that supports the needs of our 3 million mobile computing devices in our 9 million machine-to-machine devices.

So we get the economics of scale there by combining our volume, and good technology leverage to. So as you would expect mobile computing is all about the need for speed. We have to be the technology leader when AT&T launches LTE we have to be there first.

Read the rest of this transcript for free on seekingalpha.com