SAN DIEGO-PC card and wireless modem maker Novatel Wireless Inc. reported fourth-quarter results in line with its reduced guidance, news that sent the company’s stock up almost 10 percent to $13.16 per share. The announcement comes as Novatel’s main rival Sierra Wireless Inc. faces the wrath of its investors due to a greatly reduced 2005 outlook and several perceived missteps in its business.
Novatel posted revenues of $33.4 million, up from the $10.6 million it scored in the same quarter a year ago but slightly below earlier forecasts. The company’s net income was $5.2 million, a reversal of the $2.1 million net loss it recorded in the year-ago quarter.
“We believe that Novatel Wireless is clearly establishing itself as the world leader in 3G wireless data cards, with the most sales, the broadest product offering, the most advanced technology and the widest customer base, selling to the vast majority of the leading wireless carriers in the world,” said Peter Leparulo, the company’s chief executive officer.
“We believe that the PC data market is in its infancy stage, and that future margin and competitive pressure concerns are overblown,” wrote Avondale Partners in a research note to investors. “We also believe that Novatel has the right set of products and agreements with carriers to profitably meet PC card demand in 2005.”
Novatel also laid out its strategy for this year, Avondale wrote. The company plans to be the first to market with HSDPA products-a position Sierra Wireless also hopes to score. Novatel said it has a partnership with a carrier for HSDPA products. That carrier is likely Cingular Wireless, which is planning an HSDPA deployment. Novatel also plans to partner with laptop makers to embed its wireless modems in those products in time for commercial release by 2007. Sierra Wireless discussed similar plans for embedded laptop products.
Sierra Wireless and Novatel are in a heated battle for the embedded and PC card market for third-generation wireless services.
