• About us
  • Donate
  • WADR
  • Contact us
  • Live Stream
Friday, February 3, 2023
Loud Silence News
Advertisement
  • Ghana News
    • General News
    • Business
    • Education
    • Opinion
  • US News
    • Business
    • Health
    • Human Interest Stories
    • Politics
    • Education
  • Africa News
    • Business
    • Education
    • Health
    • Politics
  • ShowBiz
    • Ghana ShowBiz
    • US Showbiz
    • African ShowBiz
    • World Showbiz
  • Editorials
    • People
  • World News
    • Politics
    • Business
    • Education
    • Health
  • Sports
    • Ghana Sports
    • World Sports
  • WADR
No Result
View All Result
  • Ghana News
    • General News
    • Business
    • Education
    • Opinion
  • US News
    • Business
    • Health
    • Human Interest Stories
    • Politics
    • Education
  • Africa News
    • Business
    • Education
    • Health
    • Politics
  • ShowBiz
    • Ghana ShowBiz
    • US Showbiz
    • African ShowBiz
    • World Showbiz
  • Editorials
    • People
  • World News
    • Politics
    • Business
    • Education
    • Health
  • Sports
    • Ghana Sports
    • World Sports
  • WADR
No Result
View All Result
Loud Silence News
No Result
View All Result
Home US News US Business

Activist fund with a soft touch looks to shake up a wireless company that’s lost its way

Loud Silence Staff by Loud Silence Staff
April 26, 2020
in US Business
0
Activist fund with a soft touch looks to shake up a wireless company that’s lost its way
2
SHARES
9
VIEWS
Share on FacebookShare on TwitterShare on WhatsApp

[ad_1]

A Sierra Wireless display at a trade show.

Source: Sierra Wireless

Lion Point Capital, run by alumni of Elliott Associates, Perry Capital and Starboard Value, struck an agreement this month with Sierra Wireless, a struggling telecom hardware maker that’s trying to become a software company. We believe Lion Point has a good chance at getting its agenda implemented.

Company: Sierra Wireless Inc. (SWIR)

  • Business: Sierra manufactures cellular wireless devices and provides services in the wireless communications and IT industry. It has three business lines: (i) wireless modules (~$450 million revenue), which allows devices to connect to a network, (ii) gateways and routers (~$150 million revenue), which sells physical devices that connect to WiFi through cell towers and (iii) software and connectivity (~$100 million revenue), a mobile virtual network operator that buys wholesale connectivity for data devices from telecom operators and resells to customers.
  • Stock Market Value: $330 million ($9.13 per share)

Activist: Lion Point Capital

  • Percentage Ownership of SWIR:  5.92%
  • Average Cost: $8.35 per share
  • Activist Commentary: Lion Point launched on April 1, 2015 as a concentrated credit and equity hedge fund co-founded by Didric Cederholm, formerly of Elliott Associates, and Jim Freeman, formerly of Perry Capital and Elliott. They will pursue strategic and operational activism, nominate directors and take board seats when necessary, but will generally refrain from ultra-confrontational activism. Cristiano Amoruso, formerly of Starboard Value, joined Lion Point in 2015, specializes in technology activism and leads this investment for Lion Point.

What’s Happening:

On April 16, 2020, Lion Point and Sierra entered into a cooperation agreement, pursuant to which, among other things, the company agreed to expand the size of the board to 12 and appoint three directors identified by Lion Point.

Behind the Scenes:

The company has historically been a manufacturer of hardware. In October of 2018, Sierra appointed Kent Thexton, a 15-year tenured board member of the company and former chief marketing officer of O2 plc (now part of Telefonica), as CEO. Thexton had a vision of becoming a small telecom operator and started the software and connectivity business. To build the business Thexton did several acquisitions that have not yet been fully integrated and hired many new people, including a salesforce of 150 people to focus on software and connectivity.

This has had several adverse effects on the company. First, that division loses $20 to $30 million per year, severely impacting company EBITDA. Second, it took away focus from the core businesses, resulting in a decline in revenue for the wireless modules business. Third, as part of this vision the company aggressively suggested that clients bundle the hardware and software, leading to losses in revenue in the hardware businesses. As a result, the two core businesses went from $615 million in revenue to $600 million and the company’s EBITDA declined from $50 million to less than $10 million.

The first opportunity here is to fix margins. A small improvement in gross profit margin could be made to get the company back closer to 40% from 30% to 35% today. This could be done by moving away from an internal procurement model to an external procurer with more bargaining power and taking away the procurement forecasting from the sales department who generally overpredict demand. But the main margin improvement will come in operating margins. The wireless module business has low single digit operating margins, and should be closer to 9% to 11%; the gateway and router business is at 10% to 12% in operating margins and should be at the high teens. One way to improve margins would be from integrating the company’s three or four ERP systems to give them more visibility to single client profitability. But the main opportunity here would be to close or sell the connectivity business, potentially to KORE Wireless or Aeris, who both do internet of things (IoT) connectivity.

Lion Point is well on its way to getting its way, we believe. Although it only has three of 12 directors, there are already directors on the board who we believe would be sympathetic to Lion Point’s plan. On March 23rd, the Company added Greg Waters to the Board. Waters was appointed to Mellanox Technologies’ board through a settlement with Starboard and although this was after Amoruso left Starboard, Waters certainly understands the value of a plan like this. More importantly, the company’s chairwoman, Robin Abrams, serves on the board of Lattice Semiconductor, where Lion Point has three board seats. She certainly knows Amoruso and has worked constructively with him at Lattice.

Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio Manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments.

[ad_2]

This content first appear on cnbc

You might also like

Billionaire Mark Zuckerberg loses $5.9bn in a day as Facebook faces rare outage, whistleblower testimony

Global cases top 3.6 million, Trump says more deaths inevitable

Supreme Court says Justice Ruth Bader Ginsburg underwent treatment for gallbladder condition

Tags: Breaking News: Marketsbusiness newsHedge FundsInvestment strategyMarketsSierra Wireless Inc
Previous Post

Arsenal Players Allowed To Return To Club’s Training Ground On Monday amid Coronavirus pandemic | Football/Soccer

Next Post

Govt to impose curfew as business counts the cost and sport codes set to suffer big losses

Loud Silence Staff

Loud Silence Staff

Related Posts

US Business

Billionaire Mark Zuckerberg loses $5.9bn in a day as Facebook faces rare outage, whistleblower testimony

by News Reporter
October 5, 2021
Global cases top 3.6 million, Trump says more deaths inevitable
US Business

Global cases top 3.6 million, Trump says more deaths inevitable

by Loud Silence Staff
May 6, 2020
Supreme Court says Justice Ruth Bader Ginsburg underwent treatment for gallbladder condition
US Business

Supreme Court says Justice Ruth Bader Ginsburg underwent treatment for gallbladder condition

by Loud Silence Staff
May 6, 2020
US Business

United Airlines service workers sue over schedule cuts after airline got federal coronavirus aid

by Loud Silence Staff
May 5, 2020
Disney reports quarterly earnings, and TikTok gains more influence
US Business

Disney reports quarterly earnings, and TikTok gains more influence

by Loud Silence Staff
May 5, 2020
Next Post
Govt to impose curfew as business counts the cost and sport codes set to suffer big losses

Govt to impose curfew as business counts the cost and sport codes set to suffer big losses

Recommended

Galamsey’ queen’ Aisha Huang re-arrested and remanded by Accra Court

Galamsey’ queen’ Aisha Huang re-arrested and remanded by Accra Court

September 5, 2022
Time to reflect a ‘blessing in disguise’ for Lions’ Whiteley

Time to reflect a ‘blessing in disguise’ for Lions’ Whiteley

April 20, 2020

Categories

  • African Business
  • African Education
  • African Health
  • African News
  • African Politics
  • African ShowBiz
  • Education
  • Ghana Business
  • Ghana News
  • Ghana ShowBiz
  • Ghana Sports
  • Human Interest Stories
  • News
  • Opinion
  • People
  • ShowBiz
  • Social Trends
  • US Business
  • US Education
  • US Health
  • US News
  • US Politics
  • US Showbiz
  • WADR
  • World Business
  • World News
  • World Politics
  • World Showbiz
  • World Sports

Don't miss it

Minority makes a strategic change of leadership in parliament with Ato Forson as Minority leader.
Ghana News

Minority makes a strategic change of leadership in parliament with Ato Forson as Minority leader.

January 24, 2023
Kusi Boateng’s JNS has never paid taxes neither have they ever filed annual tax returns – Okudzeto Ablakwa
Ghana News

Kusi Boateng’s JNS has never paid taxes neither have they ever filed annual tax returns – Okudzeto Ablakwa

January 23, 2023
Akufo Addo Spent ¢10bn of Covid-19 funds on ‘budget support’ – Auditor-General’s report
Ghana News

Akufo Addo Spent ¢10bn of Covid-19 funds on ‘budget support’ – Auditor-General’s report

January 23, 2023
OSP Kissi Agyebeng Protects NPA Boss Mustapha Hamid Over Illegal Contract
Ghana News

OSP Kissi Agyebeng Protects NPA Boss Mustapha Hamid Over Illegal Contract

January 22, 2023
Hon. Okudzeto Ablakwa Exposes Serious Criminal conduct Of Kusi Boateng Who is the Secretary of the Board of Trustees of Akufo Addo’s Cathedral
Ghana News

Hon. Okudzeto Ablakwa Exposes Serious Criminal conduct Of Kusi Boateng Who is the Secretary of the Board of Trustees of Akufo Addo’s Cathedral

January 16, 2023
It’s so late deserting the already Sunk ship – Mahama jabs Alan, Afriyie Akoto
Ghana News

It’s so late deserting the already Sunk ship – Mahama jabs Alan, Afriyie Akoto

January 13, 2023

About Us

LOGO

Loud Silence Radio & TV Network and is a multi media production company focusing on Ghanaian and African news.

Contact

  • Alexandria, Virginia, USA
  • +1 212-602-9641
  • loudsilenceradio@gmail.com
Facebook Twitter Youtube Linkedin

Download App

google play store

© 2021 Loud Silence Media. All rights reserved.

  • About us
  • Contact us
  • Donate
  • Live Stream
  • Privacy Policy
  • Terms of Use
Menu
  • About us
  • Contact us
  • Donate
  • Live Stream
  • Privacy Policy
  • Terms of Use
No Result
View All Result
  • Ghana News
    • General News
    • Business
    • Education
    • Opinion
  • US News
    • Business
    • Health
    • Human Interest Stories
    • Politics
    • Education
  • Africa News
    • Business
    • Education
    • Health
    • Politics
  • ShowBiz
    • Ghana ShowBiz
    • US Showbiz
    • African ShowBiz
    • World Showbiz
  • Editorials
    • People
  • World News
    • Politics
    • Business
    • Education
    • Health
  • Sports
    • Ghana Sports
    • World Sports
  • WADR
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.