It has been quite some time since Novatel Wireless (NVTL) has fallen out of favor with investors. The road from a high in the $20's and GAAP 2007 profitability of $1.21 per share has been a rough one. Is the company finally at a turnaround point? Novatel Wireless management believes that strategic initiatives are in place for sequential revenue growth and improved 2013 results. As of the preliminary Q4 and 2012 year end release, the company has projected revenues in the $83 to $93 million range and Non-GAAP EPS $-0.19 to $-.07.
Recent developments look promising which likely led to the share price increase from a January 2013 opening price of $1.35.
The demands for mobile data and a mobile hotspot are increasing. Our Internet needs are no longer supported by wireless built for a stagnant home personal computer world. From your Apple (AAPL) iPad or Amazon (AMZN) Kindle to your new General Motors (GM) vehicle, the world is moving (literally) to personal wireless freedom with every device in every location. This growth of web connected devices was projected by Cisco (CSCO) to grow to 50 billion, in 2020, which is an astounding 6.58 devices per person.
Novatel Wireless has improved upon its mobile hotspot, a category the company invented and titled MiFi. Novatel Wireless currently holds over 50 patents related to smart hotspot technology. Today the latest MiFi 2 4G LTE hotspot can be considered best in class with a battery life of 11 hours to run up to 10 mobile devices at once. In a recent press release, the company touted a proprietary software update that not only increases the 11 hour battery life by 50%, but also makes data transmission faster and increased the company's lead. The MiFi 2 device was released in September 2012 and has since been introduced at AT&T in September of 2012 and at Bell Canada in February of 2013. AT&T (T), Verizon (VZ), and Sprint Nextel (S) carry other Novatel Wireless MiFi devices as well.
Novatel Wireless MiFi competition includes many cell phones that include a hotspot like the iPhone 5 or Samsung (SSNLF.PK) Galaxy 3. The external phone MiFi value proposition lies in its ability to run with the sole purpose of transmitting data. Allowing an external device to connect and transmit at 4G LTE speeds take away the demand on a cell phone battery and processor. Other external cell phone mobile hotspot competitors include, Sierra Wireless (SWIR) and ZTE (ZTCOF.PK). Novatel Wireless strength here lies in its patent portfolio, which is the subject of a current lawsuit against ZTE.
The jury is still out and May 7th will be a very important day for prospective investors. The company will release it Q1 2013 sales figures which include the first full quarter MiFi 2 Liberate revenues from AT&T. Other points of interest involve the Novatel Wireless M2M portfolio showing signs of life with a 16% Q4 2012 sequential growth. Quality Partnerships have been beneficial to this trend continuing. One recent partnership involves providing Thrifty Car Rental with an enhanced vehicle tracking solution. Also, with the General Motors announcement of including hotspots in most 2015 models, could Novatel Wireless benefit? General Motors intends for the AT&T network to connect their mobile hotspots. Novatel Wireless has a good relationship with AT&T and as of yet is the first U.S. carrier to have the Novatel MiFi 2 Liberate device. General Motors is not new to automotive hotspots but until 2015 models it has mostly been optional. Autonet Mobile has provided many of these hotspots developed through a partnership with Novatel Wireless. That being said, it's highly speculative, but Novatel Wireless may benefit from the latest General Motors move.