Sierra Wireless (SWIR)

We reiterate our Buy rating for Sierra Wireless (SWIR - Snapshot Report), a leading developer of OEM wireless modem cards and access solutions, following the company's recent financial results, achieving strong free cash flow generation and effective cost reduction initiatives.

Sierra's first quarter 2009 financial results were well above our estimates even as the company contends with intensifying competition in the PC OEM market, coupled with unfavorable economic conditions. Management also provided an encouraging outlook for financial performance over the next quarter.

According to our assessment, Sierra's acquisition of Wavecom may act as a major revenue catalyst in future reporting periods. This acquisition is expected to diversify the company's business opportunities into new vertical markets -- in particular, the high-margin machine-to-machine segment.