Novatel Wireless Inc.
) reported mixed results in the first quarter of 2012 as the bottom
line missed the Zacks Consensus Estimate while the top line beat
On a GAAP basis, net loss in the reported quarter was $37.9
million or $1.17 per share, deteriorating considerably from the
year-ago net loss of $22.1 million or 69 cents per share. However,
adjusted loss per share of20 cents in the first quarter of 2012 was
worse than the Zacks Consensus Estimate of a loss of 12 cents per
Total revenue in the reported quarter stood at $100.2 million,
up 62.1% year over year and also ahead of the Zacks Consensus
Estimate of $92 million. The year-over-year revenue growth was
mainly attributable to improved performance in the Mobile Broadband
Revenue by Product Category
Revenue from Mobile Broadband Devices (Mobile Computing
Products) was $90.9 million, up 82.5% year over year. Embedded
Solutions (M2M Products and Solutions) revenue was $9.3 million,
down 22.5% year over year.
Gross margin was 21% in the quarter compared with 9.7% in the
year-ago quarter. Operating expenses (excluding amortization and
Goodwill impairment charges) in the reported quarter were $29
million compared with $27.6 million in the prior-year quarter.
During the reported quarter, Novatel generated negative cash
flow of $18.2 million from operations compared with $36.5 million
in the year-ago quarter. Free cash flow was negative $19.4 million
compared with $37.9 million in the previous quarter. At the end of
the first quarter of 2012, Novatel had approximately $52.6 million
in cash & marketable securities on its balance sheet compared
with $75.4 million at the end of fiscal 2011. The balance sheet of
Novatel remains debt free.
Management provided revenue guidance for the second quarter of
2012 in the range of $92 million-$104 million. Non-GAAP gross
margin is expected to be between 22% and 23%. Non-GAAP EPS is
anticipated in the band of a loss of 17 cents per share to profit
of 7 cents per share.
We believe that the continuous launch of innovative products
like 4G LTE-capable MiFi Intelligent Mobile Hotspot technology and
the world's thinnest 4G LTE-enabled USB modem called Ovatio MC679
to large carriers like
Verizon Communication Inc.
) will create future growth prospect for the company. Moreover,
Novatel's diversification into machine-to-machine (M2M) intelligent
asset management solutions and newly developed insurance telematics
and fleet management products will further boost its top-line
growth going forward. We, thus maintain our long-term Neutral
recommendation on Novatel.
Currently, Novatel has a Zacks #3 Rank, implying a short-term
Hold rating on the stock.
NOVATEL WIRELES (NVTL): Free Stock Analysis
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VERIZON COMM (VZ): Free Stock Analysis Report
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