Yesterday, after the market closed, Novatel Wireless Inc. (NVTL) declared first quarter 2010 financial results that beat the Zacks Consensus Estimates. However, the company’s second quarter 2010 outlook was below expectations.
First quarter total revenue of $72.24 million was up 2.6% year over year and was also above the Zacks Consensus Estimate of $71 million. This reflects higher sales of Novatel’s MiFi line of Intelligent Mobile Hotspots products, currently constituting 47% of the total revenue.
On a GAAP basis, net loss in the first quarter was $3.4 million or 11 cents per share, compared with a net loss of $2.5 million or 8 cents per share in the prior-year quarter. However, the quarterly net loss of 11 cents per share is narrower than the Zacks Consensus Estimate for a loss of 12 cents per share.
Quarterly gross margin was 24.6%, compared with 22.8% in the year-ago quarter. Operating expenses in the reported quarter were $22.5 million, compared with $20 million in the prior-year quarter.
During the first quarter 2010, Novatel generated $9.9 million of cash from operations, compared with a cash consumption of $9.1 million in the year-ago quarter. Quarterly free cash flow (cash flow from operations less capital expenditures) was $9.1 million, compared with a ($9.7) million in the prior-year quarter.
At the end of the first quarter 2010, Novatel had approximately $184.6 million of cash & marketable securities on its balance sheet, compared with $176 million at the end of the previous year. The company maintains a debt free balance sheet.
Future Financial Outlook
Management’s guidance for second quarter revenue was $70 million, well below the current Zacks Consensus Estimate of $74 million. Gross margin will be 22%. Loss per share on a GAAP basis will be 12 cents, significantly higher than the current Zacks Consensus Estimate of a loss of 7 cents per share.
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