M2M companies report 4Q11 financial results

Among the first machine-to-machine (M2M) companies to release fourth quarter financial results for 2011 are Digi International, Numerex and Sierra Wireless.  Results varied overall, with some companies experiencing a decline in fourth quarter revenue due to internal decisions and circumstances. Digi International’s fourth quarter revenue declined due to the flood in Thailand, which impacted its operations. Sierra Wireless saw a decline in revenue largely due to an absence in revenue from Barnes and Noble and Clearwire, while Numerex had a slight increase in revenue compared to the year-ago quarter.


DIGI


Digi International’s (Minnetonka, Minn., USA) revenue was down in its first quarter of 2012, which is accredits to a flooding in Thailand that it said impacted its operations of contract manufacturers. Digi reported revenue of $46.7 million in its first quarter of 2012, compared to $48.3 million in the year-ago quarter.


Net income for the first fiscal quarter of 2012 was $0.7 million, or $0.03 per diluted share, compared to $2.3 million or $0.09 per diluted share in the year-ago quarter.


During the first fiscal quarter of 2012, Digi experienced lower revenue by approximately $3.0 million due to the flooding in Thailand, resulting in a reduction of earnings per diluted share of approximately $0.05, inclusive of additional costs incurred to reestablish limited production capabilities of our contract manufacturer, says the company.


Revenue in North America was $27.8 million in both the first quarter of fiscal 2012 and the first quarter of fiscal 2011. Revenue in EMEA was $11.6 million in the first quarter of 2012 compared to $12.6 million in the year-ago quarter, a decrease of $1.0 million, or 8.7%.


Revenue in the Asia Pacific region was $5.6 million in the first quarter of 2012 compared to $6.1 million in the first quarter of fiscal 2011, a decrease of $0.5 million, or 8.4%. Latin American revenue was $1.7 million in the first quarter of 2012 compared to $1.8 million in the comparable quarter a year ago, a decrease of $0.1 million, or 4.0%.  


Numerex


Numerex (Atlanta, Ga., USA) posted a slight increase in total net revenue for the fourth quarter of 2011. The M2M Company reported revenue of $15.6 million this quarter, up from $14.9 million in the fourth quarter of 2011. Numerex also reported M2M revenues of $14.9 million, compared to $14.7 million in both the third quarter of 2011 and the fourth quarter of 2010.


The company posted M2M embedded device and hardware revenue of $4.5 million, down from $5.9 million in the year-ago quarter. For all of 2011, the M2M embedded device and hardware revenue was $18.6 million, down significantly from $23.3 million in 2010.


Numerex added 268,000 new subscriptions in 2011 compared to 234,000 new subscriptions in 2010.


“The company's subscription base grew 25% in the fourth quarter compared to Q4 of 2010, reflecting increased activity in several markets,” says Stratton Nicolaides, chairperson and CEO of Numerex. “Accordingly, we have upwardly revised our subscription growth estimates to the 25% to 30% range for the full year 2012, as a result of the momentum created in the fourth quarter.”


Numerex currently has about 1.5 million subscriptions spanning 50 verticals.


Sierra Wireless


Sierra Wireless (British Columbia, Canada) reported a decline in revenue from the year-ago quarter as well as the third quarter of 2011. According to the company, the decrease in revenue was primarily due to the absence of revenue from Barnes & Noble and Clearwire.


Revenue for the fourth quarter of 2011 was $147.2 million, a decrease of 12% compared to $167.2 million in the fourth quarter of 2010, and comparable to $146.8 million in the third quarter of 2011.


M2M revenue was $71.3 million, down 15% compared to the fourth quarter 2010, which included $8.4 million of revenue from Barnes & Noble. Mobile Computing revenue was $75.9 million, down 9% compared to $83.2 million in the fourth quarter of 2010, which included $6.4 million of revenue from Clearwire.


On a GAAP basis, gross margin was $41.6 million, or 28.2%, in the fourth quarter of 2011, compared to $48.9 million, or 29.2%, in the fourth quarter of 2010.


Operating expenses were $54.0 million and loss from operations was $12.5 million in the fourth quarter of 2011, compared to operating expenses of $49.0 million and a loss from operations of $0.2 million in the fourth quarter of 2010. The operating loss in the fourth quarter of 2011 included an intangible asset impairment charge of $11.2 million, primarily related to a software development program that was acquired through the purchase of Wavecom, S.A. in 2009 and which Sierra Wireless abandoned during the quarter.


According to the company, the program had no impact on its operations in prior periods nor do they expect it to have an impact on its future operations.


Revenue for 2011 was $578.2 million, a decrease of 11% compared to $650.3 million fin 2010. M2M revenue was $293.2 million in 2011, down 11.8% compared to $332.4 million in 2010.


In the first quarter of 2012, Sierra Wireless expects revenue to be relatively flat compared to the fourth quarter of 2011.

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