Novatel Wireless Reports Record Second Quarter Revenues
Tuesday July 26, 4:15 pm ET
Revenues Increase 19% Sequentially - GAAP Net Income of $0.10 per Share
SAN DIEGO, Calif.--(BUSINESS WIRE)--July 26, 2005--Novatel Wireless, Inc. (Nasdaq:NVTL - News), a leading provider of wireless broadband access solutions, today reported financial results for the second quarter ended June 30, 2005.
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Revenues for the second quarter were $38.6 million, which is a 60% increase over $24.1 million reported in the same period last year. Second quarter GAAP net income of $2.9 million or $0.10 per diluted share includes a non-cash provision for income taxes of $1.6 million, and compares to non-taxed GAAP net income of $3.2 million or $0.11 per diluted share in the prior year period.
In the second quarter, Novatel Wireless provisioned for taxes at a 35% tax rate. The Company anticipates that for 2005 it will pay cash taxes in the range of approximately 0% to 10% of pre-tax book income. As a result, Non-GAAP net income using an anticipated cash tax rate of 10% was $4.0 million or $0.13 per diluted share, which represents 25% growth from $3.2 million or $0.11 per diluted share in the prior year period.
At June 30, 2005 total cash and investments balance was $92.4 million or $3.17 per share, a sequential increase of $6.3 million from the first quarter of 2005.
"In the second quarter, revenues rose 19% sequentially to the highest level in company history," commented Peter Leparulo, Novatel Wireless' Chief Executive Officer. "Our strong performance was driven by increasing shipments to Verizon Wireless domestically, continued expansion with Vodafone internationally and a strong debut of the first generation of our Ovation product line. Additionally, we announced the introduction of our Merlin S620 wireless PC Card designed to operate on Sprint's EV-DO and 1xRTT networks and expect to start shipping in volume in the third quarter. Through our strong relationships with most of the leading wireless carriers in the world, we believe we can continue to solidify our market leadership in 3G wireless modems and expect continued sequential revenue growth in the third quarter."
"The second quarter was highlighted by the successful debut of our Ovation product family -- one of the most significant product development efforts in company history," continued Mr. Leparulo. "Ovation provides small office/home office (SOHO), enterprise and residential markets with cost effective access to voice and broadband data services, putting us right at the forefront of fixed-mobile convergence in both voice and data. Sales of our first generation Ovation product reached $3.9 million in the second quarter and initial customer feedback has been very positive. We are planning to start shipping late in the third quarter our next generation Ovation product with significantly higher functionality and intellectual property content."
"We were especially pleased with our very strong second quarter revenue performance despite a weakening Euro which impacted both our top line and gross margins by approximately $700,000 or over $0.01 per share," explained Dan Halvorson, Chief Financial Officer of Novatel Wireless. "Excluding the impact of the Euro and expenses related to the move to a direct distribution model in Europe, gross margins would have been approximately in line with the prior quarter. Moving forward, we expect the Euro and the changes to the Company's distribution to continue to have an impact on gross margins in the third quarter. During the second quarter, we continued to invest heavily in research and development while demonstrating impressive operating leverage by successfully lowering operating expenses to 20% of sales. In the third quarter, we expect revenues to continue to grow sequentially to the range of $41 to $42 million with GAAP earnings of approximately $0.10 per diluted share and non-GAAP earnings of approximately $0.13 per diluted share."
Recent highlights during the quarter include:
June
* The Company announced the availability of the Merlin S620, a next generation broadband wireless PC Card designed to operate on Sprint's EV-DO and 1xRTT networks.
* The Company expanded its presence in Asia with the announcement that its Merlin U530 UMTS PC Card was being offered by Maxis Communications Bhd to its customers in Malaysia.
* The Company announced the availability of MobiLink 2.0 software, a universal connection manager that enables users to access 3G wireless wide area networks and Wi-Fi networks with any Novatel Wireless PC Card Modem or embedded wireless modem.
* The Merlin V620 EV-DO PC Card received the industry's first approval for network driver interface from Microsoft's Windows Hardware quality labs.
May
* The Company announced that it was now offering 02 Germany its U630 quad-band UMTS PC Card giving 02 Germany subscribers international mobile roaming capabilities.
* CEO Peter Leparulo was named a finalist for the 2005 Ernst & Young Entrepreneur of the Year awards for the San Diego region.
* Novatel Wireless and Dilithium Networks, a leading provider of 3G video telephony solutions, announced an agreement to jointly promote their complementary 3G video telephony solutions for PCs.
April
* The Company announced the development of the Expedite EU730 and Expedite EU740 PCI Express Mini Cards for HSDPA networks. The Expedite EU730 and Expedite EU740 are designed for easy integration into multiple laptop platforms and other mobile devices.
* Novatel Wireless received an Editors' Choice Award from PC Magazine for its Merlin V620 Wireless PC Card Modem.
Novatel Wireless will host a conference call for analysts and investors to discuss its quarterly results at 5:00 p.m. ET on July 26, 2005. A live Web cast of the conference call will also be accessible from the "Investor Relations" section of the Novatel Wireless Web site (www.novatelwireless.com). Following the live Web cast, an archived version will be available on the Novatel Wireless Web site.
ABOUT NOVATEL WIRELESS, INC.
Novatel Wireless, Inc. is a leading provider of wireless broadband access solutions. Novatel Wireless' Merlin(TM) PC Cards, Expedite(TM) Embedded Modems, Freedom Box(TM) Ruggedized Modems, MobiLink(TM) Communications Software Suite, Ovation(TM) 3G Multimedia Application Consoles and Conversa(TM) Software Suite enable high-speed wireless access to personal, corporate and public information. The company delivers innovative 3G solutions to operators, distributors and vertical markets worldwide. Headquartered in San Diego, California, Novatel Wireless is listed on NASDAQ: NVTL. For more information on Novatel Wireless visit www.novatelwireless.com (nvtle). |
