Novatel Wireless Reports First Quarter 2013 Financial Results

  Novatel Wireless Reports First Quarter 2013 Financial Results

  *Consolidated first quarter revenue increases 22% sequentially
  *Mobile Computing revenue increases 18% sequentially
  *Machine-to-Machine revenue increases 52% sequentially

Business Wire

SAN DIEGO -- May 07, 2013

Novatel Wireless, Inc. (NASDAQ: NVTL), a leading provider of intelligent
wireless solutions, announced financial results for the first quarter ended
March 31, 2013.

Revenue in the first quarter was $85.9 million, up 22% compared to $70.7
million in the fourth quarter of 2012. GAAP net loss in the quarter was $9.1
million, or $(0.27) per share, up from a loss of $14.9 million, or $(0.44) per
share, in the fourth quarter of 2012. On a non-GAAP basis, net loss for the
quarter was $7.4 million, or $(0.22) per share, up from a loss of $12.6
million, or $(0.38) per share, in the fourth quarter of 2012. A reconciliation
of GAAP to non-GAAP measures is included in the accompanying tables.

“In the first quarter we experienced solid demand for our new product lines in
both M2M and mobile computing, driving double-digit sequential revenue growth
and bottom line improvement,” said Peter Leparulo, CEO of Novatel Wireless.
“Our M2M business improved significantly in the first quarter, growing over
50% sequentially, the majority of which came from sales of our next generation
CDMA products. We are expanding our footprint with existing key customers and
have several design wins with industry-leading prospects, underscoring the
effectiveness of our increasingly direct sales model. In mobile computing, we
saw healthy sales order cycles, particularly for the successful introduction
of our MiFi® 5510, which launched during the quarter. We are also pleased to
have launched the MiFi 2 with Bell, the latest carrier offering this
critically acclaimed product. Both of these products are built on our highly
extendable MiFi technology platform, the applications for which are just
beginning to be tapped with the proliferation of 4G network availability.”

Recent Business Highlights

  *Novatel Wireless commercially launched its MiFi2 — the first mobile
    hotspot with a touchscreen display and the most feature rich mobile
    hotspot in the market — with Bell on Canada's largest 4G LTE Network in
    March 2013.
  *On February 24, 2013, Novatel Wireless introduced the N4A® cloud-based
    Device Manager 4.1 which provides enterprise customers with improved
    time-to-market and tools to effectively manage M2M assets through their
    entire lifecycle. The N4A Device Manager assists with activation,
    deployment, maintenance and day-to-day operation in one single, robust,
    secure and scalable platform.
  *Recently, Novatel Wireless received technical approval for its
    machine-to-machine (M2M) CDMA2000® 1X Enabler® HS 3001 module on Aeris
    Communications' network. The Enabler HS 3001 is ideal for markets such as
    security, alarm, telemetry, asset tracking, POS, mHealth, AVL and AMI/AMR
    looking for high reliability.
  *Novatel Wireless recentlyannounced that its MT 3050 device has been
    selected by Quatenus, a leading Portuguese Systems Integrator, to be
    integrated into its front-end application platform and bundled with M2M
    subscription SIM services from Optimus, one of Portugal's largest mobile
    operators.
  *Lastly, Novatel Wireless recently announced additional software
    advancements to its MiFi technology platform, improving the MiFi user
    experience with optimized power management software so MiFi users on
    platforms with enhanced software will be able to enjoy greatly extended
    usage time, and Content Delivery Optimization for even faster access to
    their data.

Second Quarter 2013 Business Outlook

The following statements are forward-looking and actual results may differ
materially. Please see the section titled, “Cautionary Note Regarding
Forward-Looking Statements” at the end of this press release. A more detailed
description of risks related to our business is included in the reports filed
by the company with the Securities and Exchange Commission.

Our guidance for the second quarter of 2013 reflects current business
indicators and expectations as of the date of this release. All figures are
approximations based on management’s beliefs and assumptions as of the date of
this release.

We enter the second quarter with a healthy order pipeline across our growth
initiatives, and are currently forecasting another sequential improvement to
our top and bottom lines. We are currently seeing an increase in demand for
our new products, as reflected by customer forecasts and orders on hand, which
exceeds component supplies because of lead time requirements. Our guidance
reflects our current view of our ability to deliver against this greater than
expected demand.

                         Second Quarter 2013
Revenue                     $90 - $98 million
                            
Non-GAAP Gross Margin       21% - 22%
                            
Non-GAAP EPS                $(0.13) - $(0.06)

Conference Call Information

Novatel Wireless will host a conference call and live webcast for analysts and
investors today at 5:00 p.m. ET. To access the conference call:

  *In the United States, call 1-877-317-6789
  *International parties can access the call at 1-412-317-6789

Novatel Wireless will offer a live webcast of the conference call, which will
be accessible from the "Investors" section of the company's website at
www.NVTL.com. A telephonic replay of the conference call will also be
available one hour after the call and will run through May 15, 2013. To hear
the replay, parties in the United States may call 1- 877-344-7529 and enter
conference code 100 275 64#. International parties may call 1-412-317-0088 and
enter the same code.

ABOUT NOVATEL WIRELESS

Novatel Wireless, Inc. is a leader in the design and development of
intelligent wireless solutions based on 2G, 3G and 4G technologies. The
company delivers specialized wireless solutions to carriers, distributors,
retailers, OEMs and vertical markets worldwide. Product lines include MiFi®
Intelligent Mobile Hotspots, Ovation™ USB modems, Expedite® embedded modules,
Enfora® Mobile Tracking Solutions, Enfora Asset Tracking Solutions, and
Enabler® smart M2M modules. These innovative products provide anywhere,
anytime communications solutions for consumers and enterprises. Headquartered
in San Diego, California, Novatel Wireless is listed on NASDAQ: NVTL. For more
information please visit www.nvtl.com. (NVTLF)

Cautionary Note Regarding Forward-Looking Statements

Some of the information presented in this release constitutes forward-looking
statements based on management’s current expectations, assumptions, estimates
and projections. In this context, forward-looking statements often address
expected future business and financial performance and often contain words
such as “may,” “estimate,” “anticipate,” “believe,” “expect,” “intend,”
“plan,” “project,” “will” and similar words and phrases indicating future
results. The information presented in this release related to our financial
results for the first quarter ended March 31, 2013 and our outlook for the
second quarter of 2013, as well as statements regarding new product launches,
are forward-looking. Forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from those
anticipated in such forward-looking statements. The Company therefore cannot
guarantee future results, performance or achievements. Actual results could
differ materially from the Company’s expectations.

Factors that could cause actual results to differ materially from Novatel
Wireless' expectations are set forth as risk factors in the Company's SEC
reports and filings and include (1) the future demand for wireless broadband
access to data, (2) the growth of wireless wide-area networking, (3) changes
in commercially adopted wireless transmission standards and technologies
including 3G and 4G standards, (4) continued customer and end user acceptance
of the Company's current products and market demand for the Company's
anticipated new product offerings, (5) increased competition and pricing
pressure from current or future wireless market participants, (6) dependence
on third party manufacturers in Asia and key component suppliers worldwide,
(7) unexpected liabilities or expenses, (8) the Company’s ability to introduce
new products in a timely manner, (9) litigation, regulatory and IP
developments related to our products or component parts of our products, (10)
the outcome of pending or future litigation, including the current class
action securities litigation, (11) the continuing impact of the recent global
credit crisis on the value and liquidity of the securities in our investment
portfolio, (12) dependence on a small number of customers, (13) the effect of
changes in accounting standards and in aspects of our critical accounting
policies and (14) the Company's plans and expectations relating to strategic
relationships, international expansion, software and hardware developments,
personnel matters and cost containment initiatives.

These factors, as well as other factors described in the reports filed by the
Company with the SEC (available at www.sec.gov), could cause actual results to
differ materially. Novatel Wireless assumes no obligation to update publicly
any forward-looking statements for any reason, even if new information becomes
available or other events occur in the future, except as otherwise required
pursuant to applicable law and our on-going reporting obligations under the
Securities Exchange Act of 1934, as amended.

Non-GAAP Financial Measures

Novatel Wireless has provided in this release financial information that has
not been prepared in accordance with GAAP. Non-GAAP operating expenses, net
income and earnings per share exclude stock-based compensation expenses,
charges and benefits related to M&A activities, acquisition-related
intangible-asset amortization, a litigation accrual, and merger integration
costs. Non-GAAP net income and earnings per share for the full year also
exclude the impact of establishing a valuation allowance related to deferred
tax assets and assume a tax rate which management believes reflects its
long-term effective tax rate.

Adjusted EBITDA and Non-GAAP net income, earnings per share, operating
expenses, and gross margin are supplemental measures of our performance that
are not required by, or presented in accordance with, GAAP. These non-GAAP
financial measures are not intended to be used in isolation and, moreover,
they should not be considered as a substitute for net income, diluted earnings
per share, operating expenses, gross margin or any other performance measure
determined in accordance with GAAP. We present adjusted EBITDA and non-GAAP
net income, earnings per share, operating expenses, and gross margin because
we consider each to be an important supplemental measure of our performance.

Management uses these non-GAAP financial measures to make operational
decisions, evaluate the Company's performance, prepare forecasts and determine
compensation. Further, management believes that both management and investors
benefit from referring to these non-GAAP financial measures in assessing the
Company's performance when planning, forecasting and analyzing future periods.
The stock-based compensation expenses are expected to vary depending on the
number of new grants issued to both current and new employees, and changes in
the Company’s stock price, stock market volatility, expected option life and
risk-free interest rates, all of which are difficult to estimate. In
calculating non-GAAP operating expenses, net income and earnings per share,
management excludes stock-based compensation expenses and charges related to
M&A activity to facilitate comparability of the Company's operating
performance on a period-to-period basis because such expenses are not, in
management's review, related to the Company's ongoing operating performance.
Management uses this view of its operating performance for purposes of
comparison with its business plan and individual operating budgets and
allocation of resources.

We further believe that these non-GAAP financial measures are useful to
investors in providing greater transparency to the information used by
management in its operational decision making. We believe that the use of
non-GAAP operating expenses, net income and earnings per share also
facilitates a comparison of Novatel Wireless’ underlying operating performance
with that of other companies in our industry, which use similar non-GAAP
financial measures to supplement their GAAP results.

Calculating non-GAAP operating expenses, net income and earnings per share
have limitations as an analytical tool, and you should not consider these
measures in isolation or as substitutes for GAAP operating expenses, net
income and earnings per share. In the future, we expect to continue to incur
expenses similar to the non-GAAP adjustments described above, and exclusion of
these items in the presentation of our non-GAAP financial measures should not
be construed as an inference that these costs are unusual, infrequent or
non-recurring. Investors and potential investors are cautioned that there are
material limitations associated with the use of non-GAAP financial measures as
an analytical tool. Some of the limitations in relying on non-GAAP operating
expenses, net income and earnings per share are:

  *Other companies, including other companies in our industry, may calculate
    non-GAAP operating expenses, net income and earnings per share differently
    than we do, limiting their usefulness as a comparative tool.
  *The Company's income tax expense will be ultimately based on its GAAP
    taxable income and actual tax rates in effect, which may differ
    significantly from the effective tax rate used in our non-GAAP financial
    measures.

In addition, the adjustments to our GAAP operating expenses, net income and
earnings per share reflect the exclusion of stock-based compensation expenses
that are recurring and will be reflected in the Company's financial results
for the foreseeable future. The Company compensates for these limitations by
providing specific information regarding the GAAP amount excluded from the
non-GAAP financial measures. The Company further compensates for the
limitations of our use of non-GAAP financial measures by presenting comparable
GAAP measures more prominently. The Company evaluates the non-GAAP financial
measures together with the most directly comparable GAAP financial measures.

Investors and potential investors are encouraged to review the reconciliation
of non-GAAP financial measures contained within this press release with our
GAAP operating expenses, net income, earnings per share and gross margin. For
more information, see the consolidated statements of operations and the
"Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income" contained in
this press release.

(C) 2013 Novatel Wireless. All rights reserved. MiFi, Expedite, Enabler,
Enfora, N4A, and the Novatel Wireless name and logo are trademarks of Novatel
Wireless, Inc. Other product or service names mentioned herein are the
trademarks of their respective owners.

NOVATEL WIRELESS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
                                                             
                                                                  
                                                                  
                                               March 31,          December 31,
                                                  2013           2012     
                                               (Preliminary and
                                               unaudited)
ASSETS
                                                                  
Current assets:
                                                                  
Cash and cash equivalents                      $   18,272         $ 16,044
Restricted cash                                    661              -
Marketable securities                              25,834           38,064
Restricted marketable securities                   4,161            -
Accounts receivable, net                           43,521           42,652
Inventories                                        30,190           39,016
Deferred tax assets, net                           126              126
Prepaid expenses and other                        4,780          4,829    
Total current assets                               127,545          140,731
                                                                  
Property and equipment, net                        14,236           15,229
                                                                  
Marketable securities                              9,862            1,201
                                                                  
Intangible assets, net                             2,887            3,163
                                                                  
Deferred tax assets, net                           534              584
                                                                  
Other assets                                      619            623      
Total assets                                   $   155,683       $ 161,531  
                                                                  
                                                                  
LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                  
Current liabilities:
                                                                  
Accounts payable                               $   43,207         $ 45,732
Accrued expenses                                   28,234           27,800
Short-term bridge loan facility                   4,822          -        
Total current liabilities                          76,263           73,532
                                                                  
Other long-term liabilities                       2,454          2,552    
                                                                  
Total liabilities                                 78,717         76,084   
                                                                  
Stockholders' equity:
                                                                  
Common stock                                       34               34
Additional paid-in capital                         439,121          438,477
Accumulated other comprehensive income             11               14
(loss)
Accumulated deficit                               (337,200  )     (328,078 )
                                                   101,966          110,447
Treasury stock at cost                            (25,000   )     (25,000  )
Total stockholders' equity                        76,966         85,447   
                                                                  
Total liabilities and stockholders'            $   155,683       $ 161,531  
equity

NOVATEL WIRELESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
                                                                
                                                Three Months Ended
                                                March 31,
                                                   2013           2012    
                                                (Preliminary and   (Unaudited)
                                                unaudited)
                                                                   
Net revenues                                    $   85,921         $ 100,150
Cost of net revenues                               69,073         79,162  
Gross profit                                       16,848         20,988  
                                                                   
Operating costs and expenses:
Research and development                            13,811           15,829
Sales and marketing                                 5,756            7,678
General and administrative                          6,326            5,534
Goodwill and intangible assets impairment           -                29,337
Amortization of purchased intangible assets        140            437     
Total operating costs and expenses                 26,033         58,815  
                                                                   
Operating loss                                      (9,185   )       (37,827 )
                                                                   
Other income (expense):
Interest income, net                                57               83
Other income (expense), net                        (77      )      7       
                                                                   
Loss before income taxes                            (9,205   )       (37,737 )
                                                                   
Income tax (benefit) provision                      (83      )       184
                                                                  
Net loss                                        $   (9,122   )     $ (37,921 )
                                                                   
Per share data:
                                                                   
Net loss per share:
Basic and diluted                               $   (0.27    )     $ (1.17   )
                                                                   
                                                                   
Weighted average shares used in computation
of
net loss per share:
Basic and diluted                                  33,717         32,296  

NOVATEL WIRELESS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
                                                                 
                                               Three Months Ended
                                                March 31,
                                                   2013           2012    
                                                (Preliminary and   (Unaudited)
                                                unaudited)
Cash flows from operating activities:
Net loss                                        $   (9,122   )     $ (37,921 )
Adjustments to reconcile net loss to
net cash provided by (used in) operating
activities:
Depreciation and amortization                       2,310            3,993
Loss on goodwill and purchased intangible           -                29,337
assets impairment
Provision for bad debts                             156              38
Inventory provision                                 65               251
Share-based compensation expense                    949              1,834
Non-cash income tax expense (benefit)               (120     )       111
Changes in assets and liabilities:
Accounts receivable                                 (1,026   )       (12,984 )
Inventories                                         8,761            (1,247  )
Prepaid expenses and other assets                   55               (1,865  )
Accounts payable                                    (644     )       (2,683  )
Accrued expenses, income taxes, and other          499            2,913   
Net cash provided by (used in) operating           1,883          (18,223 )
activities
Cash flows from investing activities:
Purchases of property and equipment                 (2,852   )       (1,170  )
Purchases of marketable securities                  (3,754   )       (11,145 )
Marketable securities maturities/sales             3,159          5,474   
Net cash used in investing activities              (3,447   )      (6,841  )
Cash flows from financing activities:
Proceeds from the issuance of short-term debt       7,000            -
Principal repayments of short-term debt             (2,178   )       -
Restricted cash on short-term debt                  (661     )       -
Principal payments under capital lease              -                (29     )
obligations
Proceeds from stock option exercises and ESPP
net of taxes paid on
vested restricted stock units                      (304     )      (211    )
Net cash provided by (used in) financing            3,857            (240    )
activities
Effect of exchange rates on cash and cash          (65      )      15      
equivalents
Net increase (decrease) in cash                     2,228           (25,289 )
Cash and cash equivalents, beginning of            16,044         47,069  
period
Cash and cash equivalents, end of period        $   18,272       $ 21,780  

Novatel Wireless, Inc.
Preliminary Reconciliation of GAAP Net Loss to Non-GAAP Net Loss
Three Months Ended March 31, 2013
(in thousands, except per share data)
(Unaudited)
                                                     
                                  Three Months Ended
                                  March 31, 2013
                                                           
                                  Net                      Income (Loss)
                                  Income                   Per Share,
                                  (Loss)                   Diluted
                                                           
GAAP net loss                     $    (9,122    )               (0.27     )
                                                           
Adjustments:
Share-based compensation               949                       0.03
expense (a)
                                                           
Acquisition related charges            224                       0.00
(b)
                                                           
Income tax adjustments (c)             (120      )               (0.00     )
                                                           
Severance (d)                         663                     0.02      
Non-GAAP net loss                 $    (7,406    )         $     (0.22     )
                                                           
(a) Adjustments reflect share-based compensation expense recorded under ASC
Topic 718.
                                                           
(b) Adjustments reflect amortization of purchased intangibles.
                                                           
(c) Adjustments for uncertain tax benefits and valuation provisions on
deferred tax assets.
                                                           
(d) Adjustments reflect reduction in force costs.
                                                           
See "Non -GAAP Financial Measures" for information regarding our use of
Non-GAAP financial measures.

Novatel Wireless, Inc.
Preliminary Reconciliation of GAAP Operating Costs and Expenses to Non-GAAP
Operating Costs and Expenses
Three Months Ended March 31, 2013
(in thousands)
(Unaudited)
                                                                
                            Share-based    Purchased
                 GAAP       compensation  intangibles   Severance   Non-GAAP
                            expense (a)    amortization   (c)
                                           (b)
                                                                      
Cost of net      $ 69,073   $   (24   )    $     84       $   40      $ 68,973
revenues
                                                                      
Operating
costs and
expenses:
Research and       13,811       291              -            433       13,087
development
Sales and          5,756        204              -            185       5,367
marketing
General and        6,326        478              -            5         5,843
administrative
Goodwill and
intangible         -            -                -            -         -
assets
impairment
Amortization
of purchased      140         -              140         -        -
intangibles
Total
operating        $ 26,033      973            140         623     $ 24,297
costs and
expenses
                                                                      
Total                       $   949       $     224      $   663
                                                                      
(a) Adjustments reflect share-based compensation expense recorded under ASC
Topic 718.
                                                                      
(b) Adjustments reflect amortization of purchased intangibles.
                                                                      
(c) Includes adjustment for reduction in force costs.
                                                                      
See "Non -GAAP Financial Measures" for information regarding our use of
Non-GAAP financial measures.

Novatel Wireless, Inc.
Preliminary Reconciliation of GAAP Loss before Income Taxes to Adjusted EBITDA
Three Months Ended March 31, 2013
(in thousands)
(Unaudited)
                                    
                                            Three Months Ended
                                            March 31, 2013
                                            
Loss before income taxes                    $         (9,205         )
Depreciation and amortization                         2,310
Share-based compensation expense                      949
Severance                                             663
Other expense (income)                               20             
Adjusted EBITDA                             $         (5,263         )

See "Non -GAAP Financial Measures" for information regarding our use of
Non-GAAP financial measures.

NOVATEL WIRELESS, INC.
Segment Reporting
Three Months Ended March 31, 2013 and 2012
(in thousands)
                                                             
                                             Three Months Ended
                                             March 31,
                                                2013            2012    
                                             (Preliminary and   (Unaudited)
                                             unaudited)
Net revenues by reportable segment:
Mobile Computing Products                    $   75,620         $  90,878
M2M Products and Solutions                      10,301          9,272   
Total                                        $   85,921        $  100,150 
                                                                
Operating loss by reportable segment:
Mobile Computing Products                    $   (5,500    )    $  (3,470  )
M2M Products and Solutions                      (3,685    )      (34,357 )
Total                                        $   (9,185    )    $  (37,827 )
                                                                
                                             March 31,          December 31,
                                                2013            2012    
                                             (Preliminary and
                                             unaudited)
Identifiable assets by reportable segment:
Mobile Computing Products                    $   133,858        $  141,045
M2M Products and Solutions                      21,825          20,486  
Total                                        $   155,683       $  161,531 

Contact:

Investors
The Blueshirt Group for Novatel Wireless
Chris DanneandMatthew Hunt
415-217-5865 or 415-489-2194
chris@blueshirtgroup.com
matt@blueshirtgroup.com
or
Media:
Charlotte Rubin
858-812-3431
crubin@nvtl.com