Novatel Wireless Inc.
) posted dismal financial results for the third quarter of 2013.
On a GAAP basis, net loss in the reported quarter was $5.1
million or a loss of 15 cents per share compared with the
year-ago net loss of $31.9 million or a loss of 97 cents.
However, adjusted loss per share of 7 cents is narrower than the
Zacks Consensus Estimate of a loss of 14 cents per share.
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Increased competition and a weaker outlook for the upcoming
quarter have hurt its stock price. Following the result
declaration, stock price fell by 76 cents or 26.12% to $2.15,
during the aftermarket trade.
Total revenue in the reported quarter stood at $92.7 million, up
30.6% year over year but below the Zacks Consensus Estimate of
$95 million. Segment wise, Mobile Computing Products generated
revenues of $84.1 million, down 29% from the year-ago quarter.
M2M Products and Solutions revenues were $8.6 million, up 48.3%
year over year.
Quarterly gross margin was 22% compared with 20.6% in the
year-ago quarter. Operating expenses in the reported quarter were
$25.2 million against $46.5 million in the year-ago quarter.
Quarterly operating loss was $4.9 million versus $31.9 million in
the prior-year quarter.
During the third quarter of 2013, Novatel consumed $10.7 million
of cash from operations compared with cash generation of $0.6
million in the year-ago quarter. Free cash flow was a negative
$12 million compared with $0.2 million in the prior-year quarter.
At the end of the third quarter of 2013, Novatel had
approximately $40.1 million in cash and marketable securities on
its balance sheet compared with $54.1 million at the end of 2012.
The balance sheet of Novatel remains debt free.
Management provided revenue guidance for the third quarter of
2013 of $66-$78 million. Non-GAAP gross margin is expected to be
between 21% and 23%. Non-GAAP earnings per share are anticipated
in the band of a loss of 14 cents per share to break-even.
Novatel supplies its LTE-based MiFi devices to the top three
carriers in the U.S., namely,
Verizon Communication Inc.
). In order to boost its top line, the company is continuously
upgrading its software and launching innovative devices in an
attempt to drive Mi-Fi usage.
However, the company is facing stiff competition from Asian
manufacturers like ZTE and Huawei Technologies, which provide
economical devices. Moreover, in recent times, most smartphones
have in-built hotspot facilities, thus completely bypassing the
need for any MiFi modem.