Sierra Wireless Inc. (NASDAQ:SWIR) shares were trading down Thursday morning after the company announced it has agreed to sell 3.5 million common shares at US$22.40 a share, raising gross proceeds of US$78.4 million.
Sierra shares were down almost 7% on the TSX, falling $1.63 from Wednesday's close of $24.04 to $22.41 as of 10:14 a.m. ET. On the Nasdaq, the stock was down 6% to US$22.33.
Sierra also granted the underwriters, led by CIBC World Markets Inc., an option to purchase up to an additional 525,000 common shares at the offering price to cover any over-allotments. The net proceeds will be used for general corporate purposes, working capital and potential future acquisitions, Sierra Wireless said.
Regarding acquisitions, Raymond James analyst Sera Kim told clients she does not expect Sierra to make a major transaction, but instead she anticipates the company will continue to make manageable, complementary and strategic acquisitions similar to the Air Link deal announced this past March.
She added, however, that Sierra's larger cash balance resulting from the share offering is slightly dilutive to its earnings per share, reducing her EPS estimate for fiscal 2007 from C$1.03 to C$1.01 and fiscal 2008 from C$1.28 to C$1.23.
Ms. Kim also reduced her price target on the stock from C$32 to C$30.75 but noted her estimates do not include the potential accretive impact of future acquisitions.
Her "outperform" rating remains unchanged.
SWIR 1-yr chart: