Novatel Wireless Announces Fourth Quarter Results
February 5, 2002
Revenues Increase Sequentially as Company Commences Shipments of GPRS and CDMA 1xRTTSAN DIEGO, CA.-February 5, 2002--Novatel Wireless, Inc. (Nasdaq: NVTL), a leading provider of wireless data communications access solutions, today reported financial results for the fourth quarter ended December 31, 2001.
Net revenues for the fourth quarter improved sequentially by over 75% from the third quarter to approximately $7.3 million, and pro forma net loss excluding non-cash charges was $7.3 million or $0.13 per share. This compared to revenues of $4.1 million and a pro forma net loss of $10.1 million or $0.19 per share in the previous quarter and revenues of $27.7 million and a pro forma net loss of $8.1 million, or $0.16 per share in the fourth quarter of 2000.
Reported net loss applicable to common shareholders for the fourth quarter of 2001 was $22.5 million, or $0.41 per share, compared to $17.2 million, or $0.53 per share, in the same period of 2000. In the fourth quarter of 2001, the Company incurred inventory charges of $11.5 million and asset impairment charges of $2.2 million, as well as amortization of deferred stock compensation of $1.3 million.
"During the quarter, Novatel Wireless became the first company to commence volume shipments of both GPRS for North America, Europe and Asia and CDMA 1xRTT wireless modems, while completing a private placement that strengthened our balance sheet and returning to sequential revenue growth," commented John Major, Chairman and Chief Executive Officer of Novatel Wireless. "Carrier interest continues to be strong as major wireless service providers worldwide move forward with efforts to monetize their 2.5G investments and our contracted backlog reaches well over $50 million."
Recent highlights include:
- On December 4th, Novatel Wireless announced a distribution agreement with BT Cellnet for GSM/GPRS, valued at over $10 million. Initial shipments have begun of the Company's Merlin G201 Wireless PC Card Modem.
- During the quarter, Novatel Wireless announced their first commercial shipment of the Merlin C201 TM Wireless PC Card Modem to Monet Mobile Networks. The first shipment is based upon a two-year supply agreement, which includes the Merlin C201TM and future 1xEV-DO home access terminals and PC card modems.
- On December 13th, Novatel Wireless announced they had delivered the first North American GPRS PC Card - Merlin G100TM Wireless PC Card - to AT&T Wireless. The Merlin G100 enables high-speed wireless access to the Internet, email, and corporate data bases at speeds up to 53.6 kbps in GPRS coverage.
- During the quarter, the Company licensed its device dialer software to Motorola, Inc. to introduce an accessory solution consisting of Novatel Wireless' software and a data cable for Motorola's wireless phones. The new product will provide a comprehensive solution for adding wireless connectivity to Palm powered handheld devices.
- In December, Novatel Wireless completed a private placement with net proceeds of $25.9 million of newly-issued Series A Convertible Preferred Stock of the Company and warrants to acquire shares of common stock. The investor group was led by Special Situations Funds and includes new investors RS Investments, LLC and other money management firms. As a result of the transaction, the Company will incur a Beneficial Conversion charge to its GAAP results.
- During the quarter, the Company also received a $10 million Secured Line of Credit with Silicon Valley Bank.
"In a difficult economic environment, plenty of challenges lie ahead for Novatel Wireless but we are excited about the progress we made in the fourth quarter," Mr. Major added. "Our successful private placement backed by leading financial institutions is a strong testament to our intellectual property and customer relationships. As we continue to partner with industry leaders like BT Cellnet, Sprint PCS, VoiceStream, Hugh Symons and Brightpoint, we demonstrate that Novatel Wireless is ideally positioned to help bring 2.5G wireless data services to businesses and consumers throughout the world."
Melvin Flowers, Chief Financial Officer added, "Our financial model improved in the fourth quarter, as product margins reached 34% and we reduced SG&A by 27% or $1.2 million sequentially from the third quarter of 2001. Looking forward, we expect to see increasing gross margins and decreasing expenses in upcoming quarters and we closed the quarter with over $29 million in cash."
Net revenues for the year ended December 31, 2001 were $43.6 million, which compares to $61.2 million reported for the year ended December 31, 2000. Pro forma net loss for the year ended December 31, 2001, excluding restructuring charges, asset impairments and other non-cash charges such as the amortization of deferred stock compensation and a provision for excess inventory was $39.0 million, or $0.71 per share based on 55.3 million shares outstanding, compared to a pro forma net loss of $31.8 million, or $0.69 per share based on 46.1 million pro forma shares outstanding, for the year ended December 31, 2000. Reported net loss applicable to common shareholders for the end of the year was $91.0 million, or $1.67 per share, compared to $50.8 million, or $3.24 per share, in the same period of 2000.
Novatel Wireless will host a conference call for analysts and investors to discuss its quarterly results at 5:00 p.m. EDT on February 5, 2002. Open to the public, a live Web cast of the conference call will be accessible from the "Investor Relations" section of Novatel Wireless's Web site (www.novatelwireless.com). Following the live Web cast, an archived version will be available on the Novatel Wireless Web site for 5 days.
About Novatel Wireless
Novatel Wireless, Inc. is a leading provider of wireless data modems and software for use with handheld computing devices and portable personal computers. The Company delivers innovative and comprehensive solutions that enable businesses and consumers to access personal, corporate and public information through email, enterprise networks and the Internet. Novatel Wireless also offers wireless data modems and custom engineering services for hardware integration projects in a wide range of vertical applications. The Novatel Wireless product portfolio includes the Minstrel® family of Wireless Palmtop Modems, MerlinTM Wireless PC Cards, Sage® Wireless Serial Modems, Lancer 3WTM Wireless 3 Watt Modems and ExpediteTM family of Wireless Embedded Modules. Headquartered in San Diego, California, Novatel Wireless is listed on the Nasdaq Stock Market (Nasdaq: NVTL). For more information, please visit the Novatel Wireless web site: www.novatelwireless.com or call 888-888-9231.
Safe Harbor Under the Private Securities Litigation Reform Act of 1995:
The results of operations for the fourth quarter and fiscal year ending December31, 2001 are not necessarily indicative of the results that may be expected for any other future period. Period-to-period comparisons of results of operations should not be relied upon as indications of future performance. Certain statements made in this news release are forward-looking statements and, in some cases, can be identified by terms such as "may," "will," "expect," "plan," "believe," "estimate," "predict" or the like. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Factors that may cause future results to differ materially include, among other things: the timing of new product releases, our success in developing and producing new products, market acceptance of our products, competitive pressures including competition for limited source components and consistency of orders from significant customers. These and other risk factors that may affect Novatel Wireless's financial results in the future are discussed in Novatel Wireless's filings with the Securities and Exchange Commission. Novatel Wireless undertakes no obligation to update any forward-looking statements.