NVTL Tumbles, Outlook Disappoints
Yesterday, after market close, Novatel Wireless Inc. (NASDAQ:NVTL) declared disappointing fourth quarter 2009 financial results. The company’s first quarter 2010 outlook is more lackluster due to lower average selling price (ASP) and weak seasonality. In the after-market trade in NASDAQ, the stock price of Novatel tumbled 76 cents (10.34%) to $6.59.
Fourth quarter total revenue of $88.64 million was up 36% year-over-year but declined 6% sequentially. Quarterly revenue was also well below the Zacks Consensus Estimate of $92 million. On a GAAP basis, net income in the fourth quarter was $0.95 million or an income of 3 cents per share compared to a net loss of $3 million or 10 cents in the prior-year quarter. However, the quarterly EPS of 3 cents is significantly below the Zacks Consensus Estimate of 8 cents.
Quarterly gross margin was 26.2% compared to 11.8% in the year-ago quarter and 31.6% in the previous quarter. Operating expenses, in the same quarter, were $22.4 million compared to $14 million in the prior-year quarter and $22.6 million in the previous quarter.
During the fourth quarter 2009, Novatel generated $5.5 million of cash from operations compared to $3 million in the year-ago quarter and a record high $28.3 million in the previous quarter. Quarterly free cash flow (cash flow from operations less capital expenditures) was $3.4 million compared to $1.2 million in the prior-year quarter and $26.9 million in the previous quarter.
At the end of fiscal 2009, Novatel had approximately $176 million of cash and marketable securities on its balance sheet compared to $143.2 million at the end of the previous year. The company is debt-free.
Outlook
Management has given guidance that the company’s first quarter 2010 revenue will be $70 million. Gross margin will be 24%. Loss per share on GAAP basis will be 13 cents.
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