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Novatel Wireless Inc. reported disappointing financial results for the second quarter of 2014. On a GAAP basis, net loss in the reported quarter stood at $17.4 million or 51 cents per share compared with a net loss of $7.9 million or 23 cents in the year-ago quarter. Quarterly adjusted loss per share was 35 cents compared with a loss of 22 cents in the prior-year quarter.

Total revenue came in at $37.3 million, reflecting a massive drop of 59.1% from the year-ago quarter. Segment wise, Mobile Computing Products generated revenues of $27.5 million, down a whopping 66% from the year-ago quarter. M2M Products and Solutions revenues totaled $9.8 million, down 5.1% year over year.

Quarterly gross margin was 10.7% compared with 20.9% in the year-ago quarter. Operating expenses in the reported quarter were $21.4 million against $26.8 million in the year-earlier quarter. Quarterly operating loss was $17.4 million as against $7.4 million in the prior-year quarter.

Meanwhile, operating loss of the Mobile Computing Products segment was $12.3 million compared with $3.4 million in the year-ago quarter.  Operating loss of the M2M Products and Solutions segment was $5.2 million against $4.4 million in the prior-year quarter.

During the second quarter of 2014, Novatel consumed $4.4 million of cash for operations compared with a cash generation of $4.6 million in the year-ago quarter. Quarterly, free cash flow was a negative $5.1 million against $3.8 million in the prior-year quarter.

At the end of the second quarter, Novatel had approximately $22.4 million in cash and marketable securities on its balance sheet compared with $19.5 million at the end of 2013. The balance sheet of Novatel remains debt free.

Recent Development

Novatel supplies LTE-based MiFi devices to the top three carriers in the U.S., namely, Verizon Communication Inc. (VZ - Analyst Report), AT&T Inc. (T - Analyst Report) and Sprint Corp. (S - Analyst Report). In an attempt to drive MiFi usage, the company is continuously upgrading its software and launching innovative devices. Recently, Novatel announced its plans to integrate its Mobile Computing (MiFi) and M2M (machine-to-machine) product lines.

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