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Novatel Earns Title of Comeback Kid of Wireless Technology

Locally based Novatel Wireless Inc. might be called the comeback kid of technology.

The company, which commands a third of the market for wireless data products, has bounced back from a slump where its stock traded under a dollar four years ago. Novatel’s stock trades on the Nasdaq as NVTL at around $14 today.

Novatel, which makes wireless cards for computers, routers and modules that go inside laptops, reported record quarterly and year-end earnings recently.

Revenues for 2006 were up 35 percent at $218 million. While net income fell to $253,000 from $11 million, the company said it has made significant progress and expects some business lines to double in the next year.

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Acting Chief Executive Officer Brad Weinert said half of laptops sold with internal wireless modules include some products made by Novatel. He expects that side of the business to grow significantly next year.


Room To Grow

Industry research shows the market for products like ones that Novatel sells is growing around 50 percent annually, so it’s no surprise a recent Forbes.com opinion piece expects good things from the company.

Admittedly, the business has had ups and downs, including a tough fourth quarter in 2005 and early 2006, but editor of Forbes Wireless Stock Watch Nikhil Hutheesing recently said, “Today, Novatel’s business is on steadier ground.”

Novatel Wireless has 260 employees, including 160 in its San Diego headquarters, with offices in Calgary, Alberta, Canada, and outside London.

Kevin Carroll, director of the San Diego chapter of AeA (formerly the American Electronics Association), called Novatel, “The unsung hero of the high-tech community.”

Today, Novatel has partnerships with local tech giant Qualcomm Inc. and firms such as Microsoft Corp. and IBM Corp.

Novatel wireless products go into computers made by Dell, Panasonic, Sony and Toshiba, as well as cell phones sold by Sprint, T-Mobile, Verizon and manufacturers in Europe and Asia.

“There were questions in the community as to whether they were going to be victims of a telecom downturn,” Carroll said.

Novatel Wireless was spun out of Canadian-based Novatel Inc. in 1996, Weinert said. Venture capitalists bought the intellectual property rights from Novatel.


Technological Advances

Weinert said one reason for the company’s turnaround is the significant advances in technology. Wireless data can be transmitted 5,000 times faster today than in the 1990s, he said.

“They’ve continually been on the cutting edge of research and development and made investments in R & D;,” said Carroll, of the AeA. “They’re always onto the next big thing, and I think the market rewarded them for that.”

The company saves money by outsourcing manufacturing to South Korea and China. Sales offices are spread throughout the globe.

Revenues for the company’s fourth quarter ending Dec. 31 were up 60 percent at $77 million when compared with the same three-month period in 2005.

Novatel’s main competition is Canadian company Sierra Wireless and European firm Option International.

Weinert is acting CEO while the board of directors considers candidates, including him, for the position. Former CEO Peter Leparulo moved to a newly created position of executive chairman of the board last fall.

Early this month, Novatel named Greg Lorenzetti to its board of directors. Lorenzetti is president at Titan Partners LLC, a private equity and technology commercialization company.

In February, Novatel presented at the Thomas Weisel Partners Technology Conference in San Francisco.

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