Correction: The transfer of Sierra Wireless’s Richmond and Carlsbad employees to Netgear will not require relocation. On January 31, Sierra Wireless clarified that Netgear will open a division in Richmond, so local employees who transfer to Netgear will remain in Richmond. Carlsbad employees will likewise transfer to Netgear, but remain in Carlsbad.
Roughly 160 Sierra Wireless Inc. (TSX:SW) employees in Richmond and Carlsbad, California, will be offered relocation to San Jose, California, to follow the company's AirCard business, which is being sold to Netgear Inc. (Nasdaq:NTGR) for $138 million.
The Sierra Wireless' AirCard is a cellular transmitter-receiver that plugs into laptops to provide 3G and 4G mobile broadband when there is no available Internet connection. Rogers' LTE Rocket Stick is an AirCard device.
The sale will leave Sierra Wireless a pureplay machine-to-machine (M2M) business with $160 million in cash and no debt. The company plans to use the liquidity to grow its M2M business in new markets, like South America.
"We believe M2M offers more profitable growth opportunities well into the future," Sierra Wireless CEO Jason Cohenour said in a conference call Monday. "Simply put, this transaction will allow us to expand our market leadership position in M2M and connected device solutions."
He added that, while the AirCard business has been profitable for his company, it was a better fit for Netgear, a computer networking equipment maker.
"To really grow AirCard significantly and to take things to the next level would take much more speculative investment in new product and channel development – investment we simply don't have the capacity to support," Cohenour said.
The sale will mean Sierra Wireless employees in Richmond and Carlsbad will need to move if they want to keep their jobs. Approximately 70 employees at Sierra Wireless' headquarters in Richmond will be offered the chance to relocate, a company spokesperson told Business in Vancouver.
"Our Carlsbad facility will transition to Netgear, as will a portion of our Richmond facility," Cohenour said.
