|Sierra Wireless abandons Voq initiative|
Posted: 08-Jun-2005 [Source: Sierra Wireless]
[Sierra Wireless ends Voq mobile phone initiative and redeploys resources to their core business. ]
Vancouver, British Columbia -- Sierra Wireless, Inc. announced that it plans to exit its Voq Professional Phone initiative and that it is shifting some Voq resources to its core PC Card and Embedded Modules business.
"These actions are designed to focus the company on the core areas of our business where we have extensive experience and a well established market position. We believe that both the PC Card and Embedded Module markets represent significant growth opportunities with the highest potential returns in our portfolio. Our goal is to ensure that we have a strong, sustainable leadership position in these areas," said David Sutcliffe, President and CEO of Sierra Wireless. "We have enjoyed limited success to date on the Voq Professional Phone and have concluded that continuing to proceed with Voq is no longer the best use of our resources, given our other opportunities. We will now seek the most effective exit, whether by divestiture or by termination of the initiative."
Voq assets and obligations, including inventory, equipment, licenses, patents, trademarks and contracts, total approximately $15 million. Sierra Wireless employs 319 people, of which approximately 55 have been working directly on the Voq product across various functions in the company. Consistent with our decision to redeploy resources to our core business, about 15 of these people will be transferred to programs in the core business, while others will remain on Voq during the Voq exit process. Approximately 99% of the company's revenue is being generated by the PC Card, Embedded Module and Rugged Mobile product lines. Recent successes in the core business include early market demonstrations of HSDPA PC Cards, new embedded module design wins with laptop computer OEMs, and strong first quarter sales mix of rugged mobiles.
The company provided guidance for the second quarter on April 21, 2005. Operating results for the second quarter to date are tracking in line with the April 21 guidance. It is anticipated that the company may incur restructuring charges associated with these changes, including possible employee severance expenses, impairment of inventory and other assets and contractual liabilities. Some charges may require cash while others may be non-cash adjustments. Any restructuring charges that apply to the second quarter could materially affect the company's ability to meet guidance. This disclosure amends the April 21 guidance. The company expects to provide more specific financial information and plans by the time of its second quarter conference call on July 20, 2005.
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