Novatel Wireless Inc. wrapped up a sale of hardware module product lines to Telit Wireless Solutions Inc. for $14.75 million, the company said on April 11.
At the same time, Novatel Wireless (Nasdaq: MIFI) said it terminated another asset purchase agreement with New Jersey-based Micronet Enertec Technologies Inc. Novatel Wireless announced in mid-February that it had signed a deal to sell its telematics hardware business to Micronet for $24 million.
The Sorrento Mesa company said it is still interested in selling the latter business to a third party — which may include Micronet (Nasdaq: MICT).
As part of the Telit deal, the buyer will pay Novatel Wireless $11 million in cash up front and approximately $3.75 million in cash for inventory within 90 days. Subsequent earn-out amounts may be paid following the closing of the transaction if certain conditions are met.
“The disposition of these modules assets accelerates our company’s transformation from a hardware-centric manufacturer to a true provider of IoT SaaS and solutions,” said Novatel Wireless CEO Sue Swenson in a prepared statement. The abbreviation IoT refers to the Internet of Things, where machines trade data with one another, often wirelessly. SaaS stands for software as a service, where customers pay a subscription fee to access software at the other end of a simple Internet connection.
Novatel Wireless is making major changes to its business model, sharpening its focus on SaaS and services.
“Hardware’s a tough business,” Swenson told the San Diego Business Journal in a November interview.
In connection with the Telit sale, Novatel Wireless granted the buyer a license to develop, manufacture and sell certain Novatel Wireless cellular modules, including subsequent versions currently in development. Novatel Wireless and Telit also inked a manufacturing and supply agreement. The deal calls for Novatel Wireless to purchase modules that will be part of certain Novatel Wireless hardware products going forward.