Novatel loss widens despite improved M2M sales

Module maker Novatel Wireless has reported a fall in profits and revenues on the back of weakening demand for its range of mobile computing products.

Despite growing interest in the company’s M2M business, Novatel’s (San Diego, CA, USA) net loss widened to $7.89 million for the three months ending June from one of $4.52 for the same period last year.

Revenues, meanwhile, fell by 11.1% over the same period, to $91.12m, but showed a 6% improvement over sales recorded for the three months ending March.

Module maker Novatel Wireless has reported a fall in profits and revenues on the back of weakening demand for its range of mobile computing products.

Despite growing interest in the company’s M2M business, Novatel’s (San Diego, CA, USA) net loss widened to $7.89 million for the three months ending June from one of $4.52 for the same period last year.

Revenues, meanwhile, fell by 11.1% over the same period, to $91.12m, but showed a 6% improvement over sales recorded for the three months ending March.

“In the second quarter we made solid progress across both M2M and mobile computing, which again drove sequential revenue growth,” said Peter Leparulo, Novatel’s chief executive. “We continued to advance our M2M business, led by 19% sequential growth of our asset management, or integrated, solutions for our targeted vertical markets – fleet management, asset tracking, after market telematics and telemetry.”

The year-on-year decline was due entirely to the disappointing performance of the company’s mobile computing products division, whose revenues fell by 12.7%, to $80.82 million.

Analysts say Novatel is facing increased competition in this market from low-cost Chinese vendors like Huawei (Shenzhen, China) and ZTE (Shenzhen, China).

However, Leparulo said the decline was partly due to components shortages for the new range of MiFi products.

“In mobile computing, revenue from our MiFi product line grew 6% sequentially, even while supply constraints moderately limited our shipments in the quarter,” he said. “With the release of our Tri-band MiFi at Sprint [Overland Park, KS, USA], we have now launched 4G LTE MiFi products with all three major North American carriers.”

By contrast, revenues from M2M products and solutions rose by 4.1%, to $10.3 million.

The company’s operating loss from mobile computing products also grew substantially, rising to $3.35 million from just $718 million in the same period last year.

Nevertheless, Novatel reported even bigger losses from its M2M activities of $4.4 million, up from $3.73 million in 2012.

Leparulo said Novatel is targeting a variety of M2M vertical markets and that its development partners would soon look to introduce new commercial telematics and telemetry programs.

“We believe we’re at the center of growth prospects with these new customers in this space for the second half of the year,” he said.