Update: Novatel Earnings

| About: Inseego Corp. (INSG)


The company missed 2Q consensus on the top and bottom lines.

Our bullish thesis is on hold as the company continues to disappoint -- missing consensus for the third straight quarter.

We didn’t anticipate the large miss for 2Q given restructuring charges.

Novatel (NVTL) managed to post 2Q earnings at a $0.33 per share loss (missing consensus of a loss of $0.19) and revenues were $37.3 million (missing $41.4 consensus). Revenue was down 23% y/y. The market responded with mixed signals. The stock initially dove 10% on the news, before rallying 18% from its intraday lows.

Novatel continues to be one of our biggest disappointments. Shares are down 23% since our last installment back in January. Going back to our initial coverage, in October 2013, shares are down 36%. As we noted back in January,

Novatel actually invented the intelligent mobile hotspot. Today, the company has a full line of mobile broadband solutions for LTE and a whole host of machine to machine (M2M) solutions as well. The key to Novatel's success is that its products operate on every major cellular wireless platform. Novatel's M2M products allow devices to communicate with each other and with servers or cloud-based infrastructure.

We put our bullish thesis on hold until the company provides better color on its restructuring plans. The company did implement various leaderships changes in 2Q, including a new CEO, which led to one-time charges. The other positive is that it is integrating its Mobil Computing and M2M segments into one business strategy.

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