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Novatel Wireless Reports Record Fourth Quarter Results; Revenues of $33.4 Million and Net Income of $0.17 per Share
February 10, 2005
SAN DIEGO, Feb 10, 2005 (BUSINESS WIRE) -- Novatel Wireless, Inc. (Nasdaq:NVTL), a leading provider of wireless broadband access solutions, today reported financial results for the fourth quarter and year ended December 31, 2004.
Revenues for the fourth quarter were $33.4 million, which is a 215% increase over $10.6 million reported in the same period last year. Based on record gross margins of 34.7%, net income applicable to common stockholders grew to approximately $5.2 million or $0.17 per diluted share -- the highest in the Company's history, which compares to a net loss applicable to common stockholders of $2.1 million or $0.23 per diluted share in the prior year period.
Revenues for the year ended December 31, 2004 were $103.7 million, a 207% increase from $33.8 million reported for the prior year. Net income applicable to common stockholders for 2004 was $13.7 million or $0.48 per diluted share which compares to a net loss of $16.7 million or $2.14 per diluted share for 2003.
"We believe that Novatel Wireless is clearly establishing itself as the world leader in 3G wireless data cards, with the most sales, the broadest product offering, the most advanced technology and the widest customer base, selling to the vast majority of the leading wireless carriers in the world," commented Peter Leparulo, Novatel Wireless' Chief Executive Officer. "Fourth quarter results, which were the best in Company history, reflect record sales of UMTS products in Europe, initial sales into the world's largest wireless operator and our entry into the EV-DO market. During the quarter, we shipped to 10 carriers in nine markets and are encouraged by recent sell-through data, as many carriers are just now rolling out widespread access to their 3G product offerings. With two important new product introductions in late December, we are well positioned to enhance our leading market share in 2005."
"At the same time, we are embarking on the most ambitious research effort in the history of the Company," added Mr. Leparulo. "We plan on introducing over eight new products in 2005, as we move into next generation technologies like HSDPA, enhance our position in EV-DO, and introduce new 3G form factors and embedded solutions. As importantly, we believe we will more than double our addressable market, with innovative advanced products like our newly introduced Ovation(TM) line. Targeted at the European market, Ovation will allow wireless carriers to offer a truly differentiated bundle of high performance, less expensive broadband Internet, local and international calling. Given the current lag in broadband deployment in Europe and the high expense of wireline local and international calling, we believe Ovation will be a compelling product in the hands of some of the continent's leading companies and brands."
Recent highlights include
-- In November, Novatel Wireless announced the introduction of
the Ovation(TM) Family of 3G Multimedia Application Consoles
for Enterprise, SOHO, and Residential Users. The Ovation
Family is a portfolio of stand-alone desktop consoles that
unifies WWAN, WLAN and/or VoIP to provide cost-effective high
speed wireless broadband access, optimal call routing and the
delivery of multimedia applications.
-- During the fourth quarter, the Company expanded its presence
in Asia with the announcements that its Merlin U530(TM) was
being offered by CSL, a leading wireless carrier in Hong Kong,
and SingTel, one of Asia's largest wireless operators.
-- In the fourth quarter, Novatel Wireless also announced the
availability of its quad-band Merlin U630(TM) Wireless PC Card
Modems. The Company began shipping these products in the
fourth quarter to Vodafone operating companies, including
Vodacom, South Africa's leading mobile operator.
-- In January, Verizon Wireless and Novatel Wireless announced
the availability of the Novatel Wireless V620, a next
generation broadband wireless PC Card for Verizon Wireless' 3G
EV-DO Network.
-- Last week, Novatel Wireless announced the introduction of the
Expedite EV620(TM) EV-DO PCI Express Mini Card designed for
turnkey integration of broadband network connectivity.
-- In January, the Company also strengthened its Board of
Directors with the addition of independent director Dr. John
Davis, a telecommunications pioneer.
"Gross margins increased to a record 34.7%, reflecting in part a favorable product mix during the quarter," explained Dan Halvorson, Chief Financial Officer of Novatel Wireless. "Moving forward, we expect to continue building our R&D and sales and marketing effort, while also entering into initial volume deployment of our EV-DO and quad-band UMTS product lines in Q1. At December 31, 2004 our total cash and investment balance was $81.2 million or $2.81 per share, reflecting impressive positive cash flow from operations of $6.5 million for the fourth quarter of 2004."
Novatel Wireless will host a conference call for analysts and investors today to discuss its quarterly results at 5:00 p.m. ET on February 10, 2005. For parties in the United States and Canada, call 1-800-240-2134 to access the earnings call. 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)
(C) 2005 Novatel Wireless. All rights reserved. The Novatel Wireless logo, Merlin, Merlin U530, Merlin U520, Expedite, Freedom Box, Ovation and Conversa are trademarks of Novatel Wireless, Inc. All other brands, products and company names mentioned herein are trademarks of their respective holders.
Note Regarding Forward Looking Statements
Some of the information presented in this release is forward-looking in nature within the meaning of the Private Securities Litigation Reform Act of 1995. Although Novatel Wireless believes that the expectations reflected in such forward-looking statements are reasonable, it cannot guarantee future results, performance or achievements. Certain factors that could cause actual results to differ materially from Novatel Wireless' expectations are set forth as risk factors in the Company's SEC reports and filings. Included among these factors are the future demand for wireless access to data, the future growth of wireless wide area networking, changes in wireless transmission standards and technologies, continued acceptance of and market demand for Novatel Wireless' products, dependence on intellectual property rights, dependence on a small number of customers, and the Company's general business and strategy, including plans and expectations relating to technology, product development, strategic relationships, customers, manufacturing, service activities, international expansion, sales initiatives and gross margin and cost containment initiatives. These factors, as well as other factors detailed from time to time in the Company's SEC reports and filings, could cause actual results to differ materially. Forward-looking statements are not guarantees of performance. Novatel Wireless assumes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
NOVATEL WIRELESS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
As of December 31,
2004 2003
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 16,486,000 $ 3,942,000
Marketable securities 36,591,000 -
Restricted cash - 635,000
Accounts receivable, net 14,061,000 8,986,000
Accounts receivable - related parties - 399,000
Inventories 9,653,000 2,349,000
Other current assets 2,182,000 1,378,000
------------- -------------
Total current assets 78,973,000 17,689,000
Property, plant and equipment, net 4,476,000 1,915,000
Marketable securities 28,144,000 -
Intangible assets, net 4,620,000 4,629,000
Other assets 110,000 188,000
------------- -------------
$ 116,323,000 $ 24,421,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,952,000 $ 6,730,000
Accrued expenses 7,962,000 1,179,000
Restructuring accrual 573,000 1,222,000
Deferred revenues 531,000 6,218,000
Current portion of capital lease
obligations 1,127,000 82,000
------------- -------------
Total current liabilities 16,145,000 15,431,000
Stockholders' equity:
Common stock 29,000 13,000
Additional paid-in capital 333,945,000 256,253,000
Accumulated other comprehensive
income (336,000) -
Deferred stock-based compensation - (142,000)
Accumulated Deficit (233,460,000) (247,134,000)
------------- -------------
Total stockholders' equity 100,178,000 8,990,000
------------- -------------
$ 116,323,000 $ 24,421,000
============= =============
NOVATEL WIRELESS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three months ended Twelve months ended
------------------------- ---------------------------
December 31, December 31,
------------ ------------
2004 2003 2004 2003
----------- ----------- ------------ ------------
Revenue $33,448,000 $10,604,000 $103,727,000 $ 33,815,000
Cost of revenue 21,857,000 7,786,000 69,780,000 27,942,000
------------ ------------ ------------- -------------
Gross margin 11,591,000 2,818,000 33,947,000 5,873,000
----------- ----------- ------------ ------------
Operating costs
and expenses:
Research and
development 3,334,000 1,447,000 10,625,000 6,118,000
Sales and
marketing 1,577,000 669,000 4,739,000 2,693,000
General and
administrative 1,551,000 850,000 5,138,000 4,068,000
Restructuring
charges - 414,000 - 828,000
----------- ----------- ------------ ------------
Total operating
expenses 6,462,000 3,380,000 20,502,000 13,707,000
Operating
income (loss) 5,129,000 (562,000) 13,445,000 (7,834,000)
Other income
(expense):
Interest income 479,000 8,000 927,000 44,000
Interest expense (26,000) (1,392,000) (56,000) (3,939,000)
Other, net (64,000) 92,000 (148,000) 91,000
----------- ----------- ------------ ------------
Income (loss)
before income
taxes $ 5,518,000 $(1,854,000) $ 14,168,000 $(11,638,000)
Provision for
income taxes (349,000) - (349,000) -
----------- ----------- ------------ ------------
Net income
(loss) after
taxes 5,169,000 (1,854,000) 13,819,000 (11,638,000)
Accretion of
dividends and
beneficial
conversion
features
pertaining to
preferred stock - (214,000) (145,000) (5,079,000)
Net income
(loss)
applicable
to common
stockholders $ 5,169,000 $(2,068,000) $ 13,674,000 $(16,717,000)
=========== =========== ============ ============
Per share data:
Net income
(loss) per
common share:
Basic $ 0.18 $ (0.23) $ 0.57 $ (2.14)
Diluted $ 0.17 $ (0.23) $ 0.48 $ (2.14)
Weighted average
shares used
in computation
of per share
calculation:
Basic 28,710,444 9,129,053 23,969,044 7,817,539
Diluted 30,876,249 9,129,053 28,863,361 7,817,539
SOURCE: Novatel Wireless, Inc.
Novatel Wireless Dan Halvorson, 858-320-8821 www.novatelwireless.com or The Blueshirt Group, Investor Relations Chris Danne/Rakesh Mehta, 415-217-7722 [email protected] [email protected]
Copyright (C) 2005 Business Wire. All rights reserved.
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