RealTime IT News

Lightning Strikes Twice At Sierra Wireless

Sierra Wireless is canceling $29 million in contracted sales of its upcoming AirCard 710, officials announced Tuesday evening, thanks, they say, to continued delays by AT&T Wireless .

Because of the cancellation, officials adjusted financial expectations for the current quarter, to $14 to 16 million in revenues and a net loss of $3 to 3.5 million. Sierra Wireless originally expected revenues somewhere between $16 and $18 million in the second quarter, with a net loss between $2.2 and $2.5 million.

Glen Brownlee, Sierra Wireless spokesperson, said the Canadian wireless modem card manufacturer expected approval by now, though he said the two companies are currently in discussion.

"We were anticipating final approval and moving on to commercial shipment later this quarter," Brownlee said. "The delay is really affecting both companies' compliance with the supply agreement the two companies have, and we concluded the only thing to do was report it to the markets because of the significant reduction in the volume commitment itself."

Because of the size of the cancelled order, shareholders needed to know of the financial hit in Sierra's revenue books, he said.

"Until we have certainty on the final agreement, we thought the most conservative approach was to zero it out completely and not speculate on a date AT&T Wireless would agree on."

AT&T officials, however, weren't aware of a problem, saying the company has another month of testing left before approval is due.

Ritch Blasi, AT&T Wireless spokesperson, said AirCard 710 testing is ongoing in several markets throughout the U.S. at the moment.

"I don't know of any specific reason why it hasn't been approved yet," he said. "My understanding was that it was supposed to be available in the second quarter, so we still have the rest of the month."

AT&T Wireless approval is the last step in a lengthy approval process for the Sierra Wireless AirCard 710. Before hitting Ma Bell's labs, the card needed approval from the Federal Communications Commission (FCC), Industry Canada (Canadian FCC) and the PCS type certification review board (PTCRB).

The card is similar to the wireless LAN cards prevalent throughout the U.S., except they use a different technology, general packet radio service (GPRS). The standard is used throughout AT&T Wireless' entire network. The AirCard 710 gives laptop and PDA users roaming Internet access speeds up to 56 Kbps, comparable to a conventional dial up Internet connection.

The two companies have a long-standing relationship, dating back to March 1998, so it's hard to understand where the miscommunication came about.

It's the second time Sierra Wireless has had major problems with a U.S. wireless carrier; last July, the company lost a key customer when Metricom-owned Ricochet and its nationwide fixed wireless offering went off the air. Sierra was a key supplier, through WebConnect!, of Ricochet modems.