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Novatel Wireless Q2 Loss Widens, Revenues Decline Y/Y


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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.