NVTL

[David Randolph]

On February 27th, NVTL gave the following guidance:

«Novatel expects to post a first-quarter adjusted profit of about 16 cents per share on revenue of about $80 million.»

«The company also said it expects an annual profit, excluding items, of between 55 cents and 70 cents per share on revenue of $330 million to $350 million. Analysts currently expect adjusted 2007 profit of 36 cents per share on revenue of $337.7 million.»

Then on March 26, just before the end of the 1st quarter, they raised guidance:

«Revenues for the first quarter are expected to increase by over 150% year-over-year and by over 30% sequentially to above $100 million. Non-GAAP EPS, which excludes stock based compensation expense, is expected to be above $0.35 per diluted share. These expected results compare to previous guidance of revenues of $80 million and non-GAAP EPS of $0.16 per diluted share.»

And then they beat expectations and raised guidance for the full year:

• Novatel Lifts 2007 Outlook
AP (Tue, May 1)

Now, for the second quarter the company projected the following:

«For the second quarter, Novatel projects earnings, excluding certain expenses, to range from 20 cents to 22 cents per share on $90 million in sales.»

So, the company gave guidance of a sequential decline in sales and EPS, from Q1 to Q2. But that's strange, since in the company's words, the 1st quarter is seasonally a weak period:

«Novatel Wireless Inc., which provides wireless broadband access services to the mobile communications market, said Tuesday a strong order backlog will drive profit in the first quarter, which has typically been a seasonally soft period for the company.»

The numbers confirm the words:



Q2 revenues were always higher than Q1. So, if seasonality continues (I don't see why not), the company will have to raise guidance, and by a lot, before the next earnings results presentation in August.

Even better, historically Q3 is also stronger than Q2 and Q4 is stronger than Q3. So, the remarkable Q1 results were even better, if we consider they were achieved during the weakest period of the year.

I think I made my point. I'll keep on holding NVTL.

[David Randolph]

The more I think and learn about NVTL, the more I like it. One could think, "ok, NVTL sells those PC cards to allow on the go mobility and internet from everywhere, but what happens when everybody already has one of those?"

As I was watching a bit of TV today (Dr. House is cool ), when commercials started I saw advertising from TMN, one of NVTL's costumers. And now they're bragging about 7.2 MB of internet speed. I remember that a couple of months before they were talking about 3.6 MB.

So, I guess that, like it happens with most computers and peripherals, things keep improving and being updated. A year from now people won't want just internet everywhere, they're going to want it with increasing speed. Who's going to supply the upgraded PC cards to allow that? You guessed it, NVTL is the strongest company in the field, stronger than SWIR.

I'm not sure if to have higher speed one needs a better PC card, but I have no doubts that these things also need to be upgraded.

I'll keep holding NVTL as I expect management to raise Q2 and full year 2007 guidance.

[David Randolph]

NVTL's bull trend has been truly friendly to shareholders. I don't see many people reading this thread, let me guess, you took profits? Too soon.

To let the profits run, as much as you can, is a valuable lesson. One needs these big fat profits to make big money in this game, no one ever got rich taking 10-20% profits in stocks. But, of course, it comes from human nature to be afraid of losing what was already earned. It's much easier to take a small profit than a small loss, yet, nobody said this game is easy.

NVTL doesn't need news to go up, everybody that looks at the company's products sees that worldwide demand for them is soaring. Therefore the company will raise guidance (again), because the one it gave previously was way too conservative.

I'll keep on holding NVTL.

[berloga]

There isn't much need to comment on this thread because NVTL is one of the most solid stocks on 3SOF board. So I just keep on holding it and checking on your updates. I think your $30 target may be somewhat conservative in the long run, but you also mentioned that the company may raise the profit target in which case you can update the model, right? Good pick!

[la-onda]

okay David, let´s talk about NVTL!!!
what about the following statement?

NVTL: JMP Sec Starts @ Mkt Outperform; Sets Tgt @ $27.5; Analyst Notes
Thursday , May 31, 2007 10:03ET
Issuer: Novatel Wireless Inc (NasdaqNM: NVTL)
Analyst Firm:  JMP Securities
Ratings Action: INITIATE
Current Rating: Mkt Outperform
Target Price Action: INITIATE
Target Price: $27.50

Analyst Comments: According to the firm, Novatel Wireless provides external and embedded 3G wireless modems for use on the world's growing number of 3G networks. They believe that Novatel Wireless provides investors with a means to play the growing adoption of broadband wireless data services enabled by the growing deployments of next-generation wireless data networks. In checks this month with 45 Sprint, Verizon, and AT&T stores in large and small cities alike, they learned that end demand for external 3G modems is exceptionally strong, with particular strength in USB modems as consumers begin to embrace 3G data services. Novatel Wireless' stock is currently trading at 20.5x the firm's CY07 operating EPS estimate of $1.12, 18.8x their CY08 operating EPS estimate of $1.22, and at a trailing P/S multiple of 2.4x. These are levels that they consider to be compelling given the company's significant growth opportunities over the next two to three years.

on fire
yours Oliver 

[David Randolph]

I think your $30 target may be somewhat conservative in the long run, but you also mentioned that the company may raise the profit target in which case you can update the model, right? Good pick!

Thanks berloga, but this is really realcoolhead's pick, congrats to him, not me

Yes, I can update my estimates for NVTL, but as I look at them, they seem stretched enough already. I have just 2% dilution rate, 50% revenue CAGR (perhaps it will be more, it has been more), 8% net profit margin (I would like to have more, but management said over the latest conference call this is what we should expect from the business over the long term) and a 26 times earnings multiple, which is already 62.5% above the market average of 16.

I expect revenue growth in 2007 to be more than 50%, but over 2008 and 2009, I don't know, at this point I see a 50% growth estimate as appropriate. The greatest potential to expand NVTL's value is if net profit margin expands from the 8% region to the 16% region. That would double the business's long term value.

But you're right berloga, at $23 there's nothing to talk about, the stock has only one way to go.

okay David, let´s talk about NVTL!!!
what about the following statement?

It's a nice statement la-onda, thanks for sharing

I'll keep holding NVTL.

[David Randolph]

Analysts keep raising their estimates for NVTL:



But they're still way below future reality in my view. For example, they're still forecasting just $0.82 EPS for 2007, but the company made $0.34 in the first quarter alone, and I expect strong growth going forward.

Over the past few days there was a multiple expansion for the Business Software & Services industry, which now trades at a 32.5 average P/E. I've changed my EPS multiple estimate for NVTL accordingly, and my optimal selling price rose from $30.15 to $37.69.

I'll keep holding NVTL.

[yukiii]

NEW YORK, June 1 (newratings.com) - Analysts at JMP Securities initiate coverage of Novatel Wireless Inc (NVTL.NAS) with a "market outperform" rating. The target price is set to $27.50.

In a research note published yesterday, the analysts mention that the company provides external and embedded 3G wireless modems through service providers, vertical-specific computing vendors and laptop computer manufacturers. Recent checks indicate robust end-demand for external 3G modems, due to Rev A upgrades by Verizon Wireless, and improved pricing trends, the analysts say. Novatel Wireless faces significant opportunities to grow over the next two-or-three years, JMP Securities adds.

[David Randolph]

NVTL's fundamental landscape didn't change and the stock continues to rise. However, the Business Software & Services industry average earnings multiple declined from 32.5 to 28.97, so I changed my EPS multiple estimate accordingly.

Now I get $33.6 as the optimal selling price.

I'll keep holding NVTL.

[David Randolph]

Bulls don't let go of buying NVTL. Yesterday the stock was pushed higher by its main competitor, SWIR, which rose 11.7%:



I should have bought not only NVTL but also SWIR, it is the sector that is on fire. Anyway, NVTL is the strongest of the two, I expect management to raise Q2 guidance or beat estimates by a wide margin.

I'll keep holding NVTL.

[la-onda]

fyi:
Novatel Wireless and NexAira Announce Strategic Partnership
Wednesday, June 06, 2007 08:00ET

SAN DIEGO, Jun 06, 2007 (BUSINESS WIRE) -- Novatel Wireless, Inc. (Nasdaq:NVTL), a leading provider of wireless broadband access solutions, and NexAira, a strategic solutions provider of wireless data applications, today announced a technology distribution agreement under which NexAira will resell the Novatel Wireless broadband product line exclusively to its distributor, agent and operator customers.

"NexAira's rapidly growing sales organization is encountering more and more customers requiring cost-effective wireless broadband access solutions," said Garry Bourns, president of NexAira. "The Novatel Wireless product portfolio enables us to offer our customers wireless broadband solutions that help them increase productivity, improve operational efficiencies and maintain a competitive edge. We are pleased that Novatel recognizes Nexaira's significant market presence and has entrusted us to be a reseller."

NexAira has been very successful as the exclusive North American distributor of the world's first HSDPA ExpressCard(TM), the Novatel Wireless Merlin(TM) XU870. Designed to provide laptop computers owners with high-speed wireless broadband access over cellular networks, the Merlin XU870 ExpressCard features an integrated, external flip antenna, maximizing data speed performance and allowing for stronger network signal reception.

Leveraging its success reselling the Merlin XU870, NexAira will also begin distribution of the Merlin PC720 PC card, the Merlin X720 ExpressCard and the Ovation(TM) MCD3000 USB modem to regional operators, MVNOs, dealers and agents looking to offer their customers best in class EV-DO Rev A mobile broadband solutions. In addition, NexAira will provide Express Card accessories including the XCA-3 universal adapter and XUA-1 USB sleeve. The NexAira estore will feature all products and accessories, providing for rapid order fulfillment.

Later this year, NexAira will begin distribution of the Expedite(R) line of embedded modules with the E720 for EV-DO Rev A networks and the E860D for HSDPA networks. NexAira bundles the Expedite line of products with integration services to provide machine-to-machine, telemetry, and mobility device manufacturers with the latest in wireless broadband solutions for integration into their products.

Building on a strong partnership that has processed more than $4 million of business in the first quarter of 2007, this agreement leverages NexAira's experienced technical support engineers and expertise in wireless product customization and order fulfillment. Subscribers to GSM and edge network providers in the United States, as well as Mac users can now utilize the NexAira estore for real-time access to best in class Novatel Wireless products and accessories.

"In the burgeoning mobile age, business professionals and consumers alike are growing dependent on high-speed remote broadband access," said Brad Weinert, acting CEO and COO of Novatel Wireless. "NexAira's experienced sales and support teams have a proven ability to move our product through its sales channel with unprecedented speed and accuracy, making the Novatel Wireless broadband access solutions available to a wide variety of end users."

[jackyw]

SIWR was added to Zacks Elite "Timely Buy" list on 05/29. Could that be one of the reason making the stock higher? Will Zack's picks help 3onfire besides our member's picks?

[David Randolph]

SIWR was added to Zacks Elite "Timely Buy" list on 05/29. Could that be one of the reason making the stock higher? Will Zack's picks help 3onfire besides our member's picks?

Hi jackyw, thanks for your question

I think that what triggered SWIR's 12% advance day on Tuesday was the following news:

• O2 announces Sierra Wireless USB Modem
PR Newswire (Tue, Jun 5)

There was also an upgrade from CIBC world markets:

Sierra Wireless Surges on Upgrade

And Zack's made the following comment:

«Momentum - Sierra Wireless, Inc. (Nasdaq: SWIR)

On Apr 26, Sierra Wireless, Inc. reported first-quarter earnings of 24 cents per share, up from 10 cents per share in the year-ago period and 12 cents above expectations. After climbing over 26% in 2006, roughly double the S&P 500 return over the same period, SWIR has soared 57% year-to-date. The stock is currently trading near three-year highs after surpassing resistance levels that had held for 12 months.»

Of the three, I believe Zack's recommendation had the least effect, since they issue several buy recommendations every day.

Yes, SWIR is attractive, but NVTL is better, as I've shown in previous updates.

I'll keep holding NVTL.

[David Randolph]

NVTL will present at a Bear Sterns conference:

• Novatel Wireless to Present at the Bear Stearns 18th Annual Technology/Communications/Internet Conference
Business Wire (Wed, Jun 6)

«"Novatel is very pleased to be working with Aliant to deliver next generation mobile data devices," said Brad Weinert, acting CEO and COO for Novatel Wireless. "Novatel Wireless' EV-DO Rev A product line enables Aliant to provide increased upload and download speeds connecting enterprise customers to remote corporate resources and consumers to their digital content anytime, anywhere."»

I'll keep holding NVTL.

[soxguy]

*DJ Novatel Wireless Fincl Chief Halvorson Resigns>NVTL

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(MORE TO FOLLOW) Dow Jones Newswires
June 08, 2007 08:15 ET (12:15 GMT)
Copyright (c) 2007 Dow Jones & Company, Inc.- - 08 15 AM EDT 06-08-07

**Brought to you by Scottrader, a product o*DJ Novatel Wireless Sees 2Q Non-GAAP EPS 29c-EPS 31c >NVTL

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(MORE TO FOLLOW) Dow Jones Newswires
June 08, 2007 08:16 ET (12:16 GMT)
Copyright (c) 2007 Dow Jones & Company, Inc.- - 08 16 AM EDT 06-08-07
*DJ Novatel Wireless Raises 2Q Rev View To $95M From $90M>NVTL

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(MORE TO FOLLOW) Dow Jones Newswires
June 08, 2007 08:18 ET (12:18 GMT)
Copyright (c) 2007 Dow Jones & Company, Inc.- - 08 18 AM EDT 06-08-07

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