Expects Third Quarter Revenue to be Within Range of Previously Provided Outlook.
Novatel Wireless (NASDAQ: NVTL), a leading provider of intelligent wireless solutions, today announced it is implementing restructuring initiatives designed to refine its business operations and capitalize on synergies in its target markets with the goal of driving long-term profitability. In connection with the restructuring plan, Novatel Wireless is making strategic organizational changes across some of its Mobile Computing and Machine-to-Machine (M2M) business operations that will streamline its research and development resources and consolidate several global manufacturing activities to drive efficiencies.
The company anticipates that the restructuring initiatives will be substantially completed within the next 30-45 days. Once fully implemented, Novatel Wireless estimates that the restructuring initiatives will generate annualized, pre-tax savings of $10 to 11 million, which will begin to be realized in the fiscal fourth quarter of 2013.
Cost savings will be achieved through the consolidation of one of the company’s development sites and certain manufacturing and other activities, which the company expects to result in a headcount reduction of approximately 75 to 80 employees.
Peter Leparulo, CEO of Novatel Wireless, said:
“The initiatives we announced today are intended to maximize efficiencies and optimize business operations.”
“We are seeing an increasing overlap in our mobile computing and M2M segments, which allows us to leverage development resources across our business units while still developing the strongest product portfolio for both segments. These initiatives also will help ensure our business model is well positioned for the long-term. We believe we are at the center of several new growth markets, and our aim with this plan is to optimize our operations as we sharpen our focus on those key growth areas.”
The company expects to record an associated, pre-tax restructuring charge in its GAAP financial results of approximately $3.2 to $4.6 million in the second half of 2013, the majority of which is expected to occur in the fiscal third quarter. This estimated charge includes termination benefits and associated costs, relocation costs, and expenses associated with the facilities consolidation. The charges will be disclosed in the company’s upcoming earnings conference calls and quarterly Form 10-Q filings.
The company expects revenue for the third quarter of 2013 to be within the outlook range it provided on August 7, 2013.
Guidance reflects the risks and uncertainties associated with the certification, production, commercialization and launch of major new products. All figures are approximations based on management’s beliefs and assumptions as of the date of this release.