Novatel Wireless (NVTL)

Novatel Wireless, a leading provider of wireless data access cards and embedded solutions, reported challenges associated with business execution, delays in next-generation product shipment due to technical issues, and reduced financial resources due to an audit committee's ongoing accounting review.

We believe these factors will continue to impact the company throughout the remainder of this fiscal year. Novatel did not provide any specific time frame or visibility for when improved opportunities from its new products can be derived. In addition, the market for wireless data access equipment has recently become more competitive as several large vendors launched innovative products with attractive pricing.

Novatel's second quarter 2008 preliminary earnings results were significantly below our estimates. We downgrade our recommendation to a Sell as we assess appropriate signs for improved conditions.