Company Begins Rollout of New 4G Products
Strong Revenue Increase Expected in Second Quarter
Novatel Wireless, Inc., a leading provider of wireless broadband access solutions, today reported preliminary financial results for the first quarter ended March 31, 2011.
|1Q 2011||1Q 2010||4Q 2010|
|GAAP Net Income (Loss)||$(22.1M)||$(3.4M)||$(0.9M)|
|GAAP EPS (Loss)||$(0.69)||$(0.11)||$(0.03)|
|Non-GAAP Net Income (Loss)||$(17.8M)||$(2.3M)||$0|
|Non-GAAP EPS (Loss)||$(0.56)||$(0.07)||$0.00|
“We have made considerable progress in rolling out the first of our next-generation 4G products, which have been very well received and are seen as the best in the market today,” said Peter Leparulo, chairman and CEO of Novatel Wireless. “We are now the only company with a full line of LTE products across all three form factors: MiFi® intelligent mobile hotspots, Ovation™ USB modems, and Expedite® embedded modules.”
“We expect financial results to significantly improve in the second quarter, even though not all 4G products will benefit from a full quarter of revenue, and component shortages may constrain sales of some products. We have plenty of work yet to do as we execute on our business strategy, but our backlog continues to grow, providing considerably improved visibility.”
First quarter revenue was $61.8 million, within our guidance range of $60 to $80 million. In addition to delayed product launches, revenue was affected by certain customers delaying orders that had been expected in the first quarter.
Sales by major product category were as follows:
|Revenue by Product Category||1Q 2011||1Q 2010*||4Q 2010*|
|Mobile Broadband Devices
Solutions & Services
* 2010 revenues in this chart are pro forma to include Enfora pre-merger results for these periods.
Gross margins were 9.7 percent of revenue on a GAAP basis, and 15.0 percent on a non-GAAP basis. Gross margins were negatively impacted primarily by the low revenue levels compared to the fixed portion of manufacturing overhead, as well as higher-than-expected costs related to new product launches and rework costs.
Enfora gross margins were also impacted by “fair-value” accounting of inventory acquired with the acquisition, as well as acquisition-related asset amortization, both of which are non-cash charges. The fair-value inventory charge will not recur in future periods.
Non-GAAP Earnings Summary
The following adjustments are included in the first quarter non-GAAP loss per share.
|GAAP Loss Per Share||$(0.69)|
|Stock-based compensation expense
|Non-GAAP Loss Per Share||$(0.56)|
GAAP financial results by operating segment were as follows:
|Mobile Computing Products||$49.8M||$72.2M|
|M2M Products and Solutions||$12.0M||—|
|Operating Income (Loss)|
|Mobile Computing Products||$(16.7M)||$(4.7M)|
|M2M Products and Solutions||$( 5.4M)||—|
Recent Business Highlights
- The Novatel Wireless USB551L 4G LTE modem became available to order on the Verizon Wireless LTE network on March 31. This is a high-performing USB modem with a compact design and industry-leading flexibility, convenience and reliability. It is also compatible with the Verizon Wireless 3G network, for customers who travel outside of a 4G LTE coverage area.
- Sprint launched the Novatel Wireless MiFi 4082 3G/4G mobile hotspot in its stores on April 17, preloaded with MiFi OS™, widgets and application support, adding capabilities beyond just Internet connectivity.
- Verizon launched the MiFi 4510L 4G LTE mobile hotspot on April 18. Running on the Verizon Wireless 4G LTE mobile broadband network, the next-generation MiFi 4510L builds on Novatel Wireless’ innovation and design, proven performance, and industry-leading user experience.
- Novatel Wireless introduced the Expedite® E373 embedded module, extending its innovative mobile broadband portfolio for LTE connectivity worldwide.
- Novatel Wireless has been named by Forbes as one of the top five most innovative tech companies in America.
- The Novatel Wireless MiFi® DLNA (Digital Living Network Alliance) Server received certification for seamless sharing of digital media across multiple platforms. The MiFi DLNA Server enables users to browse, play and share movies, music and photos on an iPad® or any other DLNA-compatible device.
- Novatel Wireless and Numerex Corp signed an agreement to offer state-of-the-art, easy-to-use smart M2M solutions, bundling Numerex service platforms with Enfora smart devices. Novatel Wireless’ expertise in advanced wireless technology standards is expected to expand the range of capabilities used by both companies in serving M2M customers.
- Novatel Wireless introduced the Enfora Spider® MT 2500 vehicle tracking platform. In addition to tracking location, its capabilities include monitoring vehicle information on rapid acceleration, harsh braking, speed violations, and excessive idling. The Spider MT 2500 is optimized for a host of vertical markets where such information is required, such as fleet management, vehicle recovery, and insurance.
- Novatel Wireless launched the next-generation of Enfora’s Spider® AT asset tag family of products. The Spider AT 3000 & 4000 series of intelligent asset management solutions are designed to monitor and track high-value remote assets. The Spider AT series can be directly managed and configured using the N4A Communications and Management Software platform to provide a detailed view of the customer’s mobile assets.
Second Quarter 2011 Business Outlook
The following statements are forward-looking and actual results may differ materially. Please see the section titled, “Cautionary Note Regarding Forward-Looking Statements” at the end of this press release. A more detailed description of risks related to our business is included in the reports filed by the company with the Securities and Exchange Commission.
Our guidance for the second quarter of 2011 reflects current business indicators and expectations as of the date of this release. All figures are approximations based on management’s beliefs and assumptions as of the date of this release.
|Second Quarter 2011|
|Revenues||$112 – $122 million|
|Non-GAAP Gross Margin||21% – 22%|
|Non-GAAP Earnings Per Share||($0.10) – $0.00|
ABOUT NOVATEL WIRELESS
Novatel Wireless, Inc. is a leader in the design and development of intelligent wireless solutions based on 2G, 3G and 4G technologies providing wireless connectivity. The company delivers specialized wireless solutions to carriers, distributors, retailers, OEMs and vertical markets worldwide. Novatel Wireless’ Intelligent Mobile Hotspot products, software, USB modems, embedded modules and smart M2M modules provide innovative anywhere, anytime communications solutions for consumers and enterprises. Headquartered in San Diego, California, Novatel Wireless is listed on NASDAQ: NVTL. For more information please visit www.nvtl.com. (NVTLF)