Sonim Technologies announced that it's open to "strategic alternatives," corporate jargon that typically precedes a sale or other major transaction.
In the company's earnings release, Sonim painted a relatively dire picture of its financial footing: "Sonim's liquidity has been negatively impacted by a decline in sales of legacy products while next generation products are still under development. ... As a result, substantial doubt exists regarding Sonim's ability to continue as a going concern. Sonim plans to explore raising additional capital from the sale of equity securities or the incurrence of indebtedness to allow it to continue operations."
Sonim builds "ultra-rugged" mobile phones and other devices for workers in austere environments such as construction sites, and sells its wares through wireless network operators,including AT&T, T-Mobile and Verizon, as well as others.
In its latest financial filing, Sonim reported cash of $13.9 million in the first quarter, which includes the $25 million it raised last year from its public offering. However, in the first quarter, the company lost $9.3 million "and it is likely that we will continue to experience operating losses into the future because we have not yet generated sufficient revenue levels needed to ensure profitability," Sonim said. The $2.4 million the company recorded in legal expenses in the first quarter, likely related to an ongoing SEC investigation into the company's finances, probably didn't help.
The financial analysts at B. Riley Securities argued that Sonim overall remains on the right track. The company is working to refresh its phone lineup with new features by the third quarter of this year. It's also planning to break into new markets, including expanding into Europe and selling new barcode scanning devices, while shifting to an original design manufacturer (ODM) business model. "Essentially, Sonim remains in the midst of a turnaround," the B. Riley Securities analysts wrote in a note to investors this week.
Company officials appeared to agree. For example, Sonim CFO Robert Tirva described the company's pursuit of strategic alternatives as a "precautionary measure" as the company's new sales efforts gain traction.
Sonim has long sought to capture a portion of the wireless phone market that behemoths like Samsung and Apple aren't servicing with gadgets that can shatter in everyday use. However, the overall phone market continues to constrict; for example, LG recently announced it will exit the market entirely.
- So long LG and thanks for the vision
- LG mulls options for troubled smartphone unit
- Tight chip supply chain threatens smartphone recovery