Novatel Wireless Inc. (NVTL - Analyst Report) posted weak financial results for the fourth quarter of 2012, which fell below the Zacks Consensus Estimates. On a GAAP basis, net loss in the reported quarter was $14.9 million or 45 cents per share, wider than the year-ago net loss of $3.4 million or 11 cents per share. Adjusted loss per share of 44 cents in the fourth quarter of 2012 was much wider than the Zacks Consensus Estimate of a loss of 31 cents per share.
Total revenue in the reported quarter stood at $70.7 million, down 35.6% year over year and also below the Zacks Consensus Estimate of $72 million. The year-over-year decline in revenue was mainly attributable to subdued performance in the Mobile Computing Product segment. Segment wise, Mobile Computing Products generated revenue of $63.9 million down 36% year over year. M2M Products and Solutions revenue was $6.8 million down 31.8% year over year.
Quarterly gross margin was 19.2% compared with 23.4% in the year-ago quarter. Operating expenses in the reported quarter were $28.2 million, remaining almost same year over year. Quarterly operating loss was $14.6 million compared with $2.5 million in the year-ago quarter.
During the fourth quarter, Novatel used $7.1 million for operations compared with a cash generation of $25.2 million in the year-ago quarter. Free cash flow was negative $7.6 million in the reported quarter compared with $24.1 million in the prior-year quarter. At the end of 2012, Novatel had approximately $55.3 million in cash and marketable securities on its balance sheet compared with $75.4 million at the end of fiscal 2011. The balance sheet of Novatel remains debt free.
Management provided revenue guidance for the first quarter of 2013 in the range of $83–$93 million. Non-GAAP gross margin is expected to be between 22% and 24%. Non-GAAP earnings per share are anticipated in the band of a loss of 19 cents per share to 7 cents per share.
Other Stocks to Consider
Novatel Wireless currently has a Zacks Rank #3 (Hold). Other stocks to consider in the wireless connectivity solutions industry include Sierra Wireless Inc. (SWIR - Snapshot Report), Synaptics Inc. (SYNA - Snapshot Report) and Planar Systems Inc. (PLNR - Snapshot Report). While Synaptics and Planar currently have a Zacks Rank #1 (Strong Buy), Sierra has a Zacks Rank #4 (Sell).