Sierra Wireless Upped to Buy

We upgrade our rating to Buy 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 4th quarter 2008 financial results were mixed with revenue challenged by intensifying competition in the PC OEM [original equipment manufacturing] market, coupled with unfavorable economic conditions. Net income, however, was significantly above our estimates due to reduction in operating expenses.

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.

Nalak Das comntributed to this report.

Read the full analyst report on SWIR