NVTL

[kslifka]

Nice
...even higher revenues than expected from their June updated guidance;D

Novatel Wireless Reports Strong Second Quarter Financial Results
Monday August 6, 4:15 pm ET 
Revenue Grows 113% Year Over Year, Gross Margins Increase as Company Raises 2007 Guidance


SAN DIEGO--(BUSINESS WIRE)--Novatel Wireless, Inc. (Nasdaq:NVTL - News), a leading provider of wireless broadband access solutions, today reported financial results for the second quarter ended June 30, 2007.
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Revenue for the second quarter was up 113% to $97.4 million compared to revenue of $45.7 million reported in the same period last year. Second quarter GAAP net income was $8.0 million, or $0.25 per diluted share. This compares to GAAP net income of $95,000, or $0.00 per diluted share in the prior year period. 2007 second quarter GAAP results include approximately $1.8 million of non-cash share-based compensation, or $0.06 per diluted share, net of taxes. Excluding the effect of these charges, non-GAAP net income was $9.8 million or $0.31 per diluted share for the second quarter of 2007.

"Results for the second quarter 2007 continued to demonstrate that Novatel Wireless is executing ahead of plan and capitalizing on the growing worldwide demand for 3G wireless broadband access solutions," commented Brad Weinert, president of Novatel Wireless. "Demand is strong across a wide range of products including Ovation USB devices, Merlin PC and Express cards, and Expedite embedded modems. Adoption of USB wireless modems has been a primary growth driver with over $85 million in sales in the nine months since its introduction. In the second half, we will introduce a number of exciting new products, including our next generation USB devices, in both the U.S. and Europe. At the same time, we are investing in R&D efforts in a number of key areas, ranging from new software products to new technologies."

"Our business continues to show substantial improvement, with second quarter non-GAAP net income nearly doubling that of the full-year in 2006," added Mr. Weinert. "Based on the strength of our current demand and backlog, we are increasing our outlook for the year to between $415 million and $425 million in revenue and non-GAAP EPS in the range of $1.25 to $1.30. This compares to previous guidance of $380 to $390 million in revenue and non-GAAP EPS of $1.00 to $1.05, an upward revision of over 20% to annual EPS guidance overall."

Q3 and 2007 Outlook

The following statements are forward-looking and actual results may differ materially. Please see the section titled, "Cautionary Note Regarding Forward-Looking Statements" at the end of this press release for a description of risks. Please see the Company's quarterly and annual reports on file with the Securities and Exchange Commission (SEC) for a more detailed description of risk factors.

The following is a summary of the Company's financial guidance for the third quarter of 2007 and the year ending December 31, 2007. These estimates are based on the Company's current business outlook as of the date of this press release. Non-GAAP earnings per diluted share are based on a projected tax rate of 35% and exclude FAS 123R share-based compensation expenses.

                                         Third Quarter   Fiscal Year
                                             2007            2007
                                         -------------  --------------
Revenue (in millions)                           $100.0  $415.0 - 425.0

GAAP Earnings Per Share, Diluted                $ 0.23  $  1.05 - 1.10

Adjustment:
  Stock-based compensation expense, net
   of income taxes                              $ 0.04  $         0.20
                                         -------------  --------------
Non-GAAP Earnings Per Share, Diluted            $ 0.27  $  1.25 - 1.30
                                         =============  ==============

[David Randolph]

NVTL's 2nd quarter earnings and guidance were spectacular:

• Novatel Wireless Reports Strong Second Quarter Financial Results
Business Wire (Mon 4:15pm)

I especially enjoyed the expansion of the full year 2007 Non-GAAP EPS guidance, from $1.05 - $1.10 to $1.25 - $1.30:



My fundamental long term take on NVTL is: people can stop paying their credit card or mortgage debts (or at least take a lot less debt in the future), but they will always need an internet connection, and when comparing the fixed and the mobile alternatives, they will definitely go for the mobile, since it costs about the same and has a lot of advantages.

What could drag NVTL down would be an earnings multiple contraction, but since the company is more than doubling revenues, I believe it will always have an earnings multiple of two or three times the market average.

The market is responding well to the news, pushing NVTL up 8.6% in after hours trading.

I'll continue holding NVTL for the long term.

[David Randolph]

Every time NVTL reports earnings it raises guidance for the full year, and I still think they're being conservative. The market reacted positively to the good news, as it should. I believe NVTL will close 2007 above $30 and I'm happy I was able to resist the temptation of taking the biggest profit of the Main in the general market turmoil.

I'll continue holding NVTL.

[berloga]

What's going on with NVTL, it's tanking!?

[David Randolph]

What's going on with NVTL, it's tanking!?

Nothing fundamentally, at least not that I know of. I guess the fall was because there was a gap opened between $21.87 and $22 and the stock went down to close it in its bottoming process.

I've heard the company's conference call, which was very long with many Q&A, so it was informative. Here are the notes I took from the CC:

- Gross margin was 31.7% (non GAAP);
- Operating margin was 14%;
- Share based compensation was $1.8 M for the quarter;
- Company sees further upside to revenues and EPS in the 4th quarter;
- WiMax is growth opportunity for NVTL, but expects revenues just in the 2nd half of 2008;
- According to management NVTL's USB products have higher margins than the ones from the competition;
- Europe has lower margins than the US, because there are more carriers there and distribution also costs more. But the company expects margins to improve in Europe as volume rises;
- 10% operating margin is the minimum that the company foresees;
- There have been 600 K to 700 K new shares per quarter, which means about 2.6 million new shares issued per year. Considering the current share count of 30,826,000, the dilution per year is 8.4%. I had just 6% in my valuation model, so let me increase the dilution factor to 1.084;
- There's a strong and renewed interest in 3G in the market place;
- The 4th quarter is seasonally the strongest to the carriers and NVTL;
- There are studies pointing that the company's market will grow at a compounded annual growth rate of 50% over the next 5 years.

Management also commented on the fact that even though its share price more than doubled over the past year, the P/E ratio is lower now. The general market probably won't help NVTL's stock, but I see the company's business being totally independent from the economic cycle, it's products are better substitutes of other products which are necessary for most people's everyday lives.

I have no doubts that NVTL's revenue and profit will be much higher two years from now than what they are now, so shares should and will probably go higher, even if the general market goes down.

I'll continue holding NVTL for the long term.

[David Randolph]

I think the general market will go down, but NVTL will go up anyway, because its growth is independent of the economic cycle. We just have some multiple compression putting pressure on NVTL, as even the CEO commented in the conference call, saying that despite the stock being up from the year ago levels, the P/E ratio is lower now.

Anyway, money will have to find a home somewhere, and I think people will pay up for reliability and growth visibility.

I'll keep holding NVTL.

[la-onda]

Analysts update:

1)
Novatel Wireless "market perform"
Wednesday, August 08, 2007 6:58:00 AM ET
JMP Securities
NEW YORK, August 8 (newratings.com) - In a research note published yesterday, analyst Samuel Wilson of JMP Securities maintains his "market perform" rating on Novatel Wireless Inc (NVTL.NAS).

2)
Novatel Wireless "neutral," estimates raised
Wednesday, August 08, 2007 8:14:40 AM ET
Cowen & Co
NEW YORK, August 8 (newratings.com) - In a research note published yesterday, analyst Matthew Hoffman of Cowen & Co maintains his "neutral" rating on Novatel Wireless Inc (NVTL.NAS), while raising his estimates for the company.

3)
Novatel Wireless "hold," estimates raised
Wednesday, August 08, 2007 8:40:39 AM ET
Morgan Joseph & Co
NEW YORK, August 8 (newratings.com) - Analyst Kevin Dede of Morgan Joseph maintains his "hold" rating on Novatel Wireless Inc (NVTL.NAS), while raising his estimates for the company.
In a research note published yesterday, the analyst mentions that the company has posted robust 2Q results, with sales and non-GAAP EPS ahead of expectations. Novatel Wireless has issued healthy sales guidance for FY07 at $415-$425 million. The analyst believes that the company's bullish guidance was driven by the HSUPA sales in Europe, the improving sales of embedded modems and continued robustness in the Ev-Do sales in North America. The EPS estimate for 2007 has been raised from $1.20 to $1.28.


very conservative updates imho

chart update:

[David Randolph]

very conservative updates imho

Yeah, they keep raising their estimates but maintain the "hold" rating:



My view is estimates, especially for 2008, are too low. Analysts are expecting just 12% EPS growth in 2008, from $1.07 to $1.20. But there are studies saying the company's industry may grow 50% on a CAGR basis over the next five years - this means a total increase of 7.6 fold in the market size

NVTL's shares rose 6.1% on Friday, but we need some more advancing days for the chart to change from short term bearish to bullish. We'll see what the next few days bring, I'll keep holding NVTL.

[David Randolph]

NVTL's shares rose 6.1% on Friday, but we need some more advancing days for the chart to change from short term bearish to bullish. We'll see what the next few days bring, I'll keep holding NVTL.

NVTL started the day very well, but it couldn't hold on to its gains when the general market turned south by mid-session.

But long term fundamentals are supportive and independent of the economic cycle, so I expect the stock to push towards $30 and beyond when the current consolidation period ends.

[David Randolph]

Again, NVTL was doing well, but the general market jitters took it down 3% by the closing bell. The consolidation period continues, but over the long term, be it because the company's specific business grows despite the economic cycle, or because the general market remains long term bullish, I see NVTL closing 2007 around $30.

I'll keep holding NVTL for the long term.

[David Randolph]

There was a form S-8 filed with the SEC yesterday, with NVTL registering 2,268,000 new shares in connection with their previously approved employee stock options plan, so nothing unexpected.

NVTL has been falling with the general market trend, holding just a bit better than the S&P 500 over the last few days.

I have no changes to make to the specific company's outlook, so I'll keep on holding NVTL.

[David Randolph]

NVTL touched support and bounced a bit towards the end of the session. If I'm right about my general market outlook I'm sure NVTL will push higher again and be at $30 plus six months from now.

If I'm wrong ... well, I have no doubts NVTL's revenues and profits will still grow nicely. However a multiple compression could make it stay around current levels, if it were very dramatic. But let's not consider this for now.

I'll hold NVTL.

[la-onda]

Director has sold 99000 shares:
http://www.secform4.com/insider-trading/1022652.htm

[bourbonstreet_crawdaddy]

Assertion:

Whoever said it before was right on the money. It is clear that manipulation in the market occurs, whether intended or not, with thinly traded companies. Our purposes here on the board are to help each other, in a synergistic way, to become a strong resource of knowledge and thus better fundamentalists and technicians.

Proposition:

I believe that we should use the fundamental data we are analyzing, to identify possible buying opportunities when they present themselves. Some of the best opportunities arise when the inherent value of a company is much higher than the present market price, and where the possibility of future stock price appreciation in the future is high.

Case Study:

This is the case with NVTL. NVTL has doubled revenues and more than doubled net income Quarter to Quarter, and Year Over Year. The company is Most Importantly in a high growth industry, where the markets will quite possibly grow at a 50% CAGR for the next five years.  The expansion of the Mobile Internet Card business is booming, and NVTL is the leader in that industry. NVTL is successfully achieving the goals that they lay out, and are intent on maximizing shareholder value through price appreciation. This is very important as well, in that they have built a long track record of making great decisions, and continue to do so.

Analysis and Outlook:

NVTL is introducing new product lines in the 2nd half of 2007 and early 2008, and is continuing to improve and expand their R&D into "new technologies", much like the improvement in the entire Mobile Internet Industry, and the current HIGH and expected HIGH growth rate in this niche. The Ovation product by NVTL opened up with over $85 million in sales alone in its first year on the market, with sales growing very rapidly in response to everyone's need / choice to bring Everything Everywhere Mobile, including voice, TV, Data, and Internet. NVTL's current products allow each person the portability to plug in a USB Modem anywhere they are, bringing the Internet to the user with Broadband speeds. NVTL is an exciting investment, and will most likely post $1 EPS in 2007, and $2 EPS in 2008; both of which are extremely conservative in my opinion. This means that around $20 right now, the company is selling at a current PE of 20 ($20/$1=20) , and a forward PE of 10 ($20/$2=10)

Conclusion:

With NVTL growing in excess of 100% on a Quarterly basis, the valuation is plain dumb, extremely low, and is currently in a multiple contraction period. As soon as the multiple expands to a reasonable level, the stock will explode upward possibly $10 to $20 or more, within a short (couple month) period.

NVTL is a true Jewel, A High Growth Company with a management team that is truly excellent in many ways.  In the way I choose to see the situation, the past has been good, the current is better, and the future will be The Best!! NVTL is a rocket ride that has enough fuel for several years, until the needs of the remaining 90% of the market that does not currently have Mobile Internet are filled. The tremendous opportunity is here, Right Now, and we can choose to take advantage of it, with a potential to see NVTL's shares zoom to $60 from below $25, in the Short-Term, and much, much higher in the next 3 to 5 years.

Good Luck to all Longs, and Enjoy the Ride...  I know I will!

Go NVTL!!

Bourbon   ;Dds a

[David Randolph]

Thanks for your NVTL analysis Bourbon

I agree with you, but I choose not to be as enthusiastic, or else people would feel (even more) disappointed if things don't come out as we expect. Or they would start counting the money, considering it as "cash in the pocket", and would feel disappointed even if the expectation turned into reality.

But I welcome your optimistic view, great read

NVTL just issued a press release:

• Junxion Releases First GPS-Enabled Remote Management Solution for Cellular Routers
Business Wire (Mon 7:00am)

It seems the nascent GPS equipment industry (for cars, for example) won't go far, because we'll have GPS in our mobile phones.

NVTL is still going through what I think is a consolidation phase, but I expect it to make a bullish breakout above $23.26 and head higher towards the end of the year.

I'll keep holding NVTL for the long term.