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.

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