Novatel Wireless Inc.
) has recently declared mixed second-quarter 2012 financial results
where its top line beats the Zacks Consensus Estimate while the
bottom line misses.
We believe the company's overall financial condition will
improve in the rest of 2012, driven by huge market traction of
Novatel's 4G products, especially the 4G MiFi intelligent hotspots
and Expedite embedded solution.
The company is upgrading its existing customers to its
innovative 4G LTE product suite. Diversification into
machine-to-machine intelligent asset management solutions and newly
developed insurance telematics and fleet management products will
further boost Novatel's future growth.
Novatel completed the acquisition of Enfora, a
machine-to-machine (M2M) intelligent asset management solutions
provider. Enfora has a long list of clientele including several
enterprises, applications service providers, OEMs and distributors.
This acquisition will place Novatel firmly in the fast growing M2M
markets. Various industry sources estimated that mobile M2M market
may reach $20 billion by 2014.
On the flip side, intensifying competition for embedded modules
is a major concern for Novatel. In addition to its traditional
rival, Sierra Wireless, the company is facing significant
challenges from newly launched products by large manufacturers,
) and L.M. Ericsson.
Qualcomm has launched its Gobi chipset that combines broadband
modem technology for high-speed 3G networks with GPS functionality.
Moreover, limited customer base may also act as a headwind for the
company going forward. We, thus maintain our long-term Neutral
recommendation on Novatel Wireless.
Currently, Novatel Wireless has a short-term Zacks #3 Rank
(Hold) on the stock.
NOVATEL WIRELES (NVTL): Free Stock Analysis
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