SAN DIEGO, Calif.-Wall Street roared its approval of struggling wireless modem maker Novatel Wireless Inc. as the company reported break-even financials and a major CDMA EV-DO deal with Verizon Wireless. Indeed, Novatel’s stock was up almost 25 percent in trading after the news to about $15.64 per share.
Novatel said it will be Verizon’s key long-term supplier of EV-DO computer cards for the carrier’s newly announced BroadbandAccess network. Novatel’s EV-DO PC card, powered by its Wireless MobiLink software, will be offered to individual and enterprise customers.
Novatel’s deal follows a major fourth quarter as well as predictions of increasing sales in the coming quarters. Novatel reported net revenues in the fourth quarter of $10.6 million, up 33 percent from the $8 million it reported in the same quarter a year ago. The company said it reached break even in its net income, excluding about $2.2 million in charges for dividends, interest expenses and restructuring costs. The company said net loss applicable to common shareholders for the fourth quarter was $2.1 million, way down from the $15.9 million net loss it reported in the same period last year.
“We are encouraged by the strong increase in fourth quarter sales, driven by growing demand for 3G UMTS products in Europe,” said Peter Leparulo, Novatel’s chief executive officer. “We are in an important leadership position with our first UMTS data terminals to roll out of mass production in partnership with multiple leading carriers in Europe and Asia. In addition, we are very excited to announce today an agreement with Verizon Wireless to be a key long-term volume supplier of 3G EV-DO PC cards and believe our product introductions will be closely synchronized with volume deployments of that technology in North America later this year. We believe these efforts, bolstered by our partnership with Sprint in CDMA 1X, deployments of our GPRS products in China and the recent introduction of Freedom Box with AT&T Wireless, will give us the broadest and most advanced line of wireless data access products on the market today.”
Novatel said it expects a sequential increase in revenues in the first quarter of between $12 million to $13 million.
