Novatel Wireless reported dismal financial results for the second
quarter of 2014 as both the top and bottom line witnessed huge fall
as compared with the last year quarter. Meanwhile, competition from
low-cost Asian manufacturers coupled with a limited customer base
will continue to act as headwinds. Management expects the company's
4G MiFi intelligent hotspots and Expedite embedded solutions to
gain significant market traction going ahead. A debt-free balance
sheet, continuous contract wins along with growing demand for
telematics services are likely to act as tailwinds for the company.
We believe Novatel Wireless is currently fairly valued and
therefore, reiterate our Neutral recommendation on the stock.
Novatel Wireless Inc. (NVTL) is a San Diego, CL-based provider
of wireless broadband access solutions for the global mobile
communications market. The company operates in the wireless data
modem technology industry. The products include 3G wireless PC-card
and ExpressCard modems, embedded modems, USB modems, Fixed-Mobile
Convergence solutions, and communications software. These products
are mainly used by wireless service providers, infrastructure
solution providers, original equipment manufacturers, and
distributors. Novatel also offers software engineering, integration
and design services to customers to facilitate the use of its
Segment wise, Mobile Computing Products accounted for 89% of the
total revenue in fiscal 2013. The remaining 11% was generated from
M2M Products and Solutions. Within the Mobile Computing segment,
MiFi accounted for 84.8% of the total revenue. Embedded Modules
accounted for 10% and the remaining 5.2% was generated from the PC
OEM business. Geographically, North America generated 95.2% of the
total revenue and international markets accounted for the rest
4.8%. Major customers include Dell, AT&T, Comcast Corp.,
Telefonica S.A., Verizon Wireless and Sprint.
Novatel Wireless Inc. (NVTL): Read the Full
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