Sierra goes M2M with AirLink purchase

Sierra Wireless Inc. announced that it will acquire M2M vendor AirLink Communications Inc. for $10 million in cash and 1.3 million in shares. Under the agreement, AirLink shareholders will end up with around 4.8 percent of the combined company.
The deal is notable as it signals Sierra’s move into the machine-to-machine business. Sierra primarily makes its business in selling wireless modems and modules to handset makers and other electronics companies. The M2M market-where objects like gas meters or vending machines wirelessly transmit readings to a central monitoring station-stands as a new opportunity for the company.
However, Sierra will face notable competition in the M2M arena; Kyocera Wireless Corp., Sony Ericsson Mobile Communications L.P. and others play in the space.
Further, Sierra’s fortunes in M2M are not assured. The company several years ago made an ill-fated attempt at the smartphone market, a venture it later abandoned.
Once combined, the new company will operate under the Sierra Wireless name and be headquartered in Richmond, British Columbia and will be led by President and CEO Jason Cohenour. AirLink CEO Andrew Berman will become the senior vice president and general manager of the Sierra Wireless M2M business unit.
Founded in 1993, AirLink is based in Hayward, Calif., and counts 50 employees. The company said it scored revenues of $24.8 million in 2006, up from the $19.8 million it earned in 2005. The company said it posted earnings from operations of $3.9 million in 2006.
“The acquisition of AirLink Communications is consistent with our strategy of renewing and strengthening our emphasis on higher gross margin products and solutions,” Cohenour said. “We believe that combining AirLink’s leading modem and software products business with our rugged MP product line creates a focused, well-positioned leader in the mobile and M2M segments of our market.”
Sierra said its revenues and earnings will increase by the end of the year through the purchase.
“By joining forces with Sierra Wireless, AirLink gains access to global distribution channels, leading edge wireless technology, large scale manufacturing and supply chain capabilities and working capital to drive future growth,” Berman said. “We are enthusiastic about becoming the driving force behind Sierra Wireless’s mobile and M2M business.”