On Thursday, Novatel Wireless (NASDAQ: NVTL), a small cap provider of wireless broadband access solutions for the worldwide mobile communications market, reported earnings and the numbers did not exactly meet Wall Street’s expectations. And while that may sound bad, not all of the news was bad for investors as the stock then surged 11.17% on Friday.
What Were the Numbers in the Novatel Wireless Earnings Report?
For the fourth quarter, Novatel Wireless reported that revenue fell from $109.8 million for the same period last year to $70.7 million (at the low end of its guidance) while GAAP net loss in the quarter came in at $14.9 million or $(0.45) per share verses $3.4 million or $(0.11) per share. Fiscal year 2012 revenue came in at $344.3 million verses $402.86 million while the GAAP net loss for the year was $89.3 million or $(2.72) per share.
On Thursday, Novatel Wireless had fallen 3.24% to $1.79 for a market cap of $59.2 million and it was falling in after hours or premarket trading. However and on Friday, the stock surged 11.17% to $1.99 for a market cap of $65.83 million. Novatel Wireless is down 45% over the past year, down 81.6% over the past five years and up 148.7% over the past ten years.
And the Good News?
Obviously investors and traders alike must have noticed some of the following good news from Novatel Wireless:
- Progress on Strategic Initiatives. In the management commentary of the Novatel Wireless earnings report, the CEO noted fundamental progress on strategic initiatives that has positioned the company for a stronger 2013. Moreover, the CEO anticipates “significant sequential revenue growth and bottom line improvement in the first quarter” as the company’s M2M business grew sequentially by 16% in the fourth quarter thanks to new product introductions, customer wins and changes made to sales channels.
- Improved Guidance. For the first quarter, Novatel Wireless is forecasting a sequential improvement in its mobile computing and M2M businesses thanks to new product launches. Specifically, the guidance calls for revenues of $83 to $93 million, non-GAAP gross margin of 22% to 24% and non-GAAP EPS of $(0.19) to $(0.07). The wide guidance range is attributable to the uncertainty over sell-through volumes for two of the new MiFi products along with uncertain timing regarding other product launches during the quarter.
- The Chart is Improving. Since about November, a look at the charts shows that Novatel Wireless has been hitting higher highs and higher lows. That could mean the stock is set for a major breakout – unless Friday was that major chart breakout.
The Bottom Line. There is no denying that long term investors are still down with Novatel Wireless, but new investors with a long term time horizon might want to take a closer look at it. Likewise, traders should take a closer look at the charts since it looks like news from the company is improving.
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