FILE - In this Friday, Jan. 25, 2013, file photo, Marissa Mayer, CEO of Yahoo!, listens during the 43rd Annual Meeting of the World Economic Forum, in Davos, Switzerland. Yahoo showed more signs of progress during the fourth quarter of 2012m, as the Internet company took advantage of higher ad prices and rising earnings from its international investments to deliver numbers that exceeded analyst forecasts. The results announced Monday, Jan 28, 2013, covered Yahoo's first full quarter under Mayer. (AP Photo/Keystone, Laurent Gillieron)
Sierra Wireless shares jump after unit sale deal
Published: 07:59:35 PM, Tue 29 January 2013 UTC
NEW YORK (AP) — Shares of Sierra Wireless Inc., which makes wireless broadband modems, jumped Tuesday after it said it would sell the division that makes accessory modems.
THE SPARK: Late Monday, Sierra Wireless said it would sell its AirCard business for $138 million in cash to Netgear Inc.
THE BIG PICTURE: Sierra Wireless' remaining business is in so-called "machine-to-machine" connections: Modems that are built into devices like smart electricity meters. It expects to use some of the proceeds for acquisitions in this space.
THE ANALYSIS: Focusing solely on the machine-to-machine business should benefit Sierra Wireless, said Steven Li, an analyst at Raymond James. The company is a market leader in this field and is well positioned to gain from the trends toward the "Internet of Everything," where more devices are connected. Machine-to-machine modules are more profitable than the accessories business, he noted.
He raised his price target to $14 from $11.25, keeping his "Outperform" rating.
SHARE ACTION: Shares of the Canadian company rose $1.55, or 17 percent, to $10.71 in afternoon trading. The day's high of $11 was the highest price since mid-2011.
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