NVTL

[soxguy]

Anyone know why nvtl is having such a nice day today? Havn't seen any news. Enjoying it nevertheless.

[David Randolph]

Anyone know why nvtl is having such a nice day today? Havn't seen any news. Enjoying it nevertheless.

I don't see any particular reason soxguy, other than the stock being undervalued.

There were two SEC forms filed yesterday, but none of them were significant.

After several days of below average volume and relative weakness, NVTL shot up on strong volume and closed clearly above its key short term resistance level, at $23.26. This time we've had relative strength. So, does relative strength or weakness tell you much about the future? Not really, at least not on a day to day basis.

Still on the technical side, we now have to surpass the 50 days SMA (standing at $24.02) to clear the way for a move towards $30. I think this is what will ultimately happen, given the fundamentals.

[David Randolph]

Still on the technical side, we now have to surpass the 50 days SMA (standing at $24.02) to clear the way for a move towards $30. I think this is what will ultimately happen, given the fundamentals.

Ok, NVTL closed just above the 50 days SMA resistance level. The market is proving all the sellers between $19.91 and 23.36 wrong and NVTL looks set to push towards $30 and beyond.

I've seen my NVTL profit cut in half and still held because I trust the fundamentals of the company and expect to earn a lot more than 100% holding this stock for the long term.

[stockhunter]

Tech Beat: Novatel, Sierra

Andrea Orr  |  Sep 07, 2007 6:29am EDT  |  User Rating N/A

Even in today's world of ubiquitous mobile communications, it may be hard to comprehend the magnitude of the wireless industry. During the second quarter of 2007 alone, some 270.9 million mobile phones were sold around the world, according to recent data from Gartner Inc. Today, there are about 2.88 billion mobile subscribers worldwide.

Those phones are becoming more and more advanced. Consumers are increasingly purchasing phones based on third generation, or 3G technology, which, in addition to enabling voice communications, offers ways to swiftly send text, images, and video.

Today there are about 470 million 3G mobile subscribers in the world, representing only a small fraction of total mobile phone users. But the 3G user base is growing rapidly.

Apple Inc.'s (Nasdaq: AAPL) iPhone, which looks more like a tiny television than a telephone, illustrates the trend well. One reason the $600 phone, er $400 phone is so popular is because of its video and other rich-media capabilities.

Other mobile device makers and PC makers are moving in the same direction, adding more functions to their wireless products so that people can not just carry a conversation but accomplish some serious work – or play – remotely.

The trend is reflected in stock values. In the wireless sector there is one, and depending on what date you use to make the comparison, maybe two stocks that have doubled in the past year. Both companies, which make wireless cards and modems to enable 3G mobile communications, are rapidly growing their revenues and signing up new customers.

Sounds good for new investors, yes? Well, maybe not so much, at least as far as Novatel Wireless Inc. (Nasdaq: NVTL) and Sierra Wireless Inc. (Nasdaq: SWIR) are currently concerned.

San Diego, Calif.-based Novatel has seen its revenues more than double in two years on brisk demand for its wireless cards, which support communications at the personal as well as the enterprise level. The company had revenues of $218 million in 2006, up from $161.7 million in 2005 and $103.7 million in 2004.

Novatel has long been profitable but in fiscal 2006 it showed an operating loss and a slim net profit of just $443,000, well below the $11.1 million profit reported in 2005. That drop partly reflected a sharp increase in its R&D and sales and marketing spending.

Investors did not seem to mind. Novatel's shares are trading around $23.50 at present, up from $9.75 at the start of the year and $11.28 this time last year.

Indeed, net income is growing again. In August, the company reported second-quarter earnings of $8 million, compared with a breakeven quarter a year earlier. Revenues more than doubled to $97.4 million.

With the release of its second quarter report, the company boosted full year forecasts, saying it now expects revenues of $415 million to $425 million, compared with previous forecasts of $380 million to $390 million, and sees net income of $1.25 to $1.30 per share, compared with its earlier forecast of $1.00 to $1.05.

Is there anything not to like here? Some analysts think so.

In July J.P. Morgan downgraded Novatel to underweight from neutral and JMP Securities cut its rating on the stock to market perform from market outperform. In August, JMP reiterated that rating, citing some hidden problems in Novatel's generally strong second quarter report.

JMP analyst Sam Wilson noted that Novatel's second quarter domestic revenue fell 14% from the first quarter, partly resulting from one of its largest customers, Sprint, pulling orders in anticipation of the release of Novatel's new and improved wireless card. Although that new modem is due to be available this month, Wilson cautioned that Novatel could face further volatility during future upgrade cycles.

This is hardly the story of a distressed stock. Some 15 analysts who follow the company are forecasting revenues this year of $419.6 million, and $497.2 million next year, up sharply from $218 million in 2006. Some 13 analysts providing earnings forecast are on average projecting that earnings this year will dip to $1.07 per share, from $1.11 last year, before growing to around $1.20 per share in 2008.

Even Wilson has a $27.50 per share price target on Novatel and says he is bullish on the 3G wireless card market in the long term. But despite recent weakness that has brought the stock down from a 52-week high of $29.14, he warns that there could be more volatility in Novatel's stock price.

Investors looking for value should sit this one out, at least at current prices.

One of Novatel's key rivals is Sierra Wireless, a Richmond, British Columbia, company that makes the same type of cards to support wireless voice communications and data transfer on cell phones, laptops and even automobile communications systems.

Sierra's stock has just about doubled over the past year. Today it sells for around $23.00 per share, up from $13.63 at the start of the year and $11.45 a year ago.

The company's financial performance has been a bit spottier than Novatel's. Its 2005 revenue fell to $107.1 million from $211.2 million in 2004, but then rebounded to $221.3 million in 2006. Net income followed a similar path. The company was profitable in 2004 and 2006, but lost money in 2005. Its 2006 net income, also impacted by aggressive investments, was $9.8 million, compared with $24.9 million two years earlier.

Now the company seems to be in a period of smoother sailing. After reporting sharply higher second quarter sales and income, Sierra said that third quarter results would comfortably surpass the prevailing analyst forecasts at the time.

Eighteen analysts follow Sierra and on average they are forecasting net income growing to $1.02 per share this year and $1.25 per share in 2008, versus $0.38 last year. They expect revenues to total $416.7 million this year, and grow to $498.9 million next year, compared with $221.3 million last year.

Unlike Novatel, which suffered some key executive departures over the past year, Sierra has been able to focus on its business with minimal distractions and in June even acquired a rival business, Airlink Communications Inc., for $37.9 million.

That deal, along with the overall growth potential of the wireless industry in June prompted CIBC World Markets analyst Ittai Kidron to upgrade the stock to "sector outperform" from "sector perform."

"We see Sierra as an excellent and pure play way to tap into the positive outlook for 3G in 2007 and beyond," Kidron wrote in a research report in late July, when he raised his price target on the stock to $30 from $28.

In August, JMP Securities upgraded the stock to "strong buy" from "market perform."

Novatel and Sierra are definitely companies to watch closely – from the sidelines. Considering the big run these stocks have already seen, it's not the ideal time to buy.

[David Randolph]

Novatel and Sierra are definitely companies to watch closely – from the sidelines. Considering the big run these stocks have already seen, it's not the ideal time to buy.

I strongly disagree with this view.

The big run happened because fundamentals improved a lot ... in fact, they improved more than the stock prices rose, making the companies more undervalued now than what they were when trading 50% below current levels.

NVTL declined a bit in tandem with the general market, touching its $23.36 prior resistance level, now support. I expect the stock to close the year above $30 and I'll keep holding it.

[David Randolph]

NVTL is still consolidating just above its previous $23.26 resistance level. The uptrend should resume soon. But, whatever happens to the chart over the short term, I'll keep holding NVTL, because I agree with the study that says that demand for the company's products will grow at a 53% compound annual growth rate between now and 2012.

[David Randolph]

Good news out for NVTL:

• Telefonica Moviles Espana Introduces Next Generation Novatel Wireless MC950D HSUPA USB Mobile Data Modem
Business Wire (Tue 8:00am)

Telefonica is big, it has 206 million costumers.

[David Randolph]

We've had that press release from NVTL ...

Good news out for NVTL:

• Telefonica Moviles Espana Introduces Next Generation Novatel Wireless MC950D HSUPA USB Mobile Data Modem
Business Wire (Tue 8:00am)

Telefonica is big, it has 206 million costumers.

... which helped fuel a 3.65% rally. We're back above the 50 days SMA, so that's losing technical significance.

Analysts estimates for 2008 still seem quite conservative:



Just $1.2 EPS, versus $1.07 in 2007, that is, about 12% growth. If you believe the following, like I do:



... then you must see $1.2 as ridiculously low. Analysts will probably raise their estimates a lot when they really start looking into 2008. And that's going to put the stock above $30, in my view.

[David Randolph]

NVTL has been weak over the last couple of days but there weren't any news or fundamental justification for that. I guess it's just the usual back and forth action before a big FED meeting, over the short term.

Over the long term we've already seen that the cellular wireless modems shipments are expected to grow at a CAGR of 53% until 2012, so NVTL will keep growing revenues and profits a lot, and that ultimately will be translated into higher prices for the stock.

I'll hold NVTL.

[David Randolph]

NVTL has been nervous, in tandem with the general market. I think people have been bailing out before the meeting, and we have a setup for a powerful rally later in the day. We'll see.

NVTL continues to trade around $23.26, without definition, but I expect this to change as analysts start revising upwards their 2008 estimates. I'll continue holding NVTL.

[la-onda]

NVTL update:

NVTL: To Present At Merriman Curhan Ford Conference @ 15:45 ET
Tuesday , September 18, 2007 14:02ET
Company representatives of Novatel Wireless Inc (NasdaqNM: NVTL) will be presenting at the Merriman Curhan Ford 4th Annual Investor Summit today. The Company's presentation is scheduled to begin at 15:45 ET.

please listen carefully 
link:
http://wsw.com/webcast/mcm7/nvtl/

cheers
Oliver

[la-onda]

highlights from updated conference presentation 
also added as download 

[David Randolph]

Thanks for reminding us of the Merriman Curhan conference la-onda

I just heard it and understand why NVTL had such a great run yesterday, and it wasn't just because of the FED rate cut.

The CEO reaffirmed the expected 50% CAGR expected for years to come and said something that I thought was really special, which was that carriers are starting to see people using NVTL's products and their service as their primary internet connection solution, substituting the fixed lines, ADSL, cable and so on. Remember we've talked about this emerging trend?

Of course, if one can have mobile for the same price and quality as fixed, why should he settle for a fixed connection? As it happened with mobile phones substituting fixed line phones I expect the same thing to happen to mobile vs fixed internet connection.

The man also reaffirmed guidance and there were some fears in the market that the company could disappoint, because of a Sprint delay or whatever. La-onda's post in SWIR's thread explains it better.

NVTL is truly set to push towards $30 before the year's end, but even better, it is set to grow immensely over the next 5 years or so.

I'll keep holding NVTL for the long term.

[David Randolph]

Up 8% in one day, down 2.2% the next day ... and I expect NVTL to move beyond $30 with this two steps forward, one step back type of behavior. When analysts start looking into 2008 estimates they'll see that what they have, $1.2 EPS representing 12% growth, is too low. Most studies indicate the industry will grow by about 50% a year for years to come, and this is in tandem with what I've been seeing in the "main street".

I'll keep holding NVTL.

[la-onda]

Novatel Wireless upgraded to "hold"

Monday, September 17, 2007 9:03:31 AM ET
Matrix Research

NEW YORK, September 17 (newratings.com) - In a research note published on September 14, analysts at Matrix Research upgrade Novatel Wireless Inc (NVTL.NAS) from "sell" to "hold."

I can´t find the sell recommendation from Matrix anymore