Novatel Wireless blames competition for sales decline, rising loss

Novatel Wireless (San Diego, USA) has reported a 13% year-on-year fall in second-quarter revenues, to $102.4 million, while the company’s net loss rose to $4.5 million from $3.9 million this time last year.

The maker of USB modems, embedded modules and smart M2M modules blamed the impact of competing products for the sales decline.

Novatel Wireless (San Diego, USA) has reported a 13% year-on-year fall in second-quarter revenues, to $102.4 million, while the company’s net loss rose to $4.5 million from $3.9 million this time last year.

The maker of USB modems, embedded modules and smart M2M modules blamed the impact of competing products for the sales decline.

Although second-quarter revenues were up on sequential basis (from $100.2 million in the first quarter), the company is predicting a sequential decline for the third quarter. “Clearly we are not satisfied with the third-quarter forecast,” said Peter Leparulo, the company’s chairman and chief executive, in a conference call with analysts.

Novatel was hit mainly by a downturn in its mobile broadband devices division, where revenues fell from $101.3 million in the second quarter of 2011 to $87.1 million. But its much smaller embedded solutions unit also struggled, with sales down to $9.1 million from $11.8 million this time last year.

Only the asset management solutions and services business showed growth. Revenues there increased from $4.9 million in the second quarter of 2011 to $6.2 million.

Novatel is in the process of launching a number of new M2M products that it hopes will expand its addressable market. Among other initiatives, it is incorporating CDMA and HSPA capabilities into its M2M devices, as well as new provisioning and management software to simplify adoption and deployment by customers.

“We expect a strong rebound in the fourth quarter,” said Leparulo. “We also expect to demonstrate concrete progress in reducing both customer concentration and product concentration through key new customer relationships, significant product introductions in both mobile computing and M2M solutions and new sales channels.”

One catalyst for a substantial improvement in the fourth quarter might be the forthcoming launch of a new MiFi product with a major North American operator that is not one of Novatel’s current customers.

Novatel is also predicting revenue growth in embedded modules, as customers launch new platforms that include its products, and growth in sales of M2M solutions.