After a tumultuous couple of years, Novatel Wireless Inc. is still trying to find its identity.
By now it’s clear that Sue Swenson will be the person shaping it.
Board members installed Swenson, their chairwoman, as CEO on Oct. 27 after firing CEO Alex Mashinsky, who served in the job for 16 months.
The transition came on the eve of the company’s quarterly financial results conference call, when investors told Swenson they would be watching her closely. The company has not been profitable since 2009.
Novatel Wireless is the company that changed its ticker symbol to MIFI in October 2014 as part of a comeback strategy. It was a nod to its marquee product, the MiFi wireless hotspot.
But the focus on MiFi does not appear to be working.
“Hardware’s a tough business,” Swenson told the San Diego Business Journal.
More than one shareholder on the Nov. 5 conference call urged the company to sell the MiFi business and concentrate on recent acquisitions, including an international telematics firm based in South Africa.
“We would certainly be willing to entertain any compelling offer” for the hotspot business, Swenson replied.
Swenson also said that integrating the company’s two recent acquisitions, DigiCore Holdings Ltd. of Pretoria and Oregon-based Feeney Wireless, will take time.
Asked how Novatel Wireless would go to market with its new mix of products, Swenson said her team was discussing the matter and urged patience.
“We want to do it right,” she told shareholders, saying she has seen other boards rush to integrate acquisitions and make mistakes.
Vehicle Tracking
One big opportunity might be introducing DigiCore’s vehicle tracking and trailer tracking services to the U.S., possibly taking business away from Massachusetts-based Fleetmatics. DigiCore does business in Europe and Africa, tracking assets for clients such as Mercedes Benz, KLM Royal Dutch Airlines and Coca-Cola.
The other acquisition, Feeney Wireless, is in the “Internet of Things” space.
The finance community may be willing to give Novatel Wireless and Swenson a second look. Novatel Wireless announced Nov. 17 that it increased the limit on its revolving line of credit from $25 million to $48 million.
The lender is Wells Fargo & Co., whose executives know Swenson. She has served on the Wells Fargo (NYSE: WFC) board since 1998.
SaaS Path
Swenson, 67, said she wants to move Novatel Wireless from its current position, selling hardware to wireless carriers, to one where it gets recurring revenue from subscriptions. Hardware margins are low, she said. Software as a service has higher margins.
As far as the CEO’s job goes, Swenson said it wasn’t her idea.
“Trust me, I was not gunning for this job,” she said. It was the board that approached her about taking over as chief executive.
“The board acted decisively,” Swenson said. “It did what it was supposed to do.” She added that the board was previously criticized for inaction.
A revolt among activist shareholders in the spring of 2014 eventually ousted Peter Leparulo from the CEO’s job — which he held off and on since 2003 — and put Mashinsky in office. Mashinsky was one of two activist investors named to the board in April 2014. By June of that year he was chief executive. Mashinsky fired several members of the C-suite and in 2015, acquired the Feeney and DigiCore businesses.
The more recent CEO transition may have looked abrupt from the outside but it was actually more gradual, Swenson said. She had been working at the office at Mashinsky’s request for several months, she said, and had become acquainted with the staff.
The transition makes sense, the CEO went on to say, because Mashinsky is at heart a startup man, an entrepreneur. Swenson said her strong suit is operations, and she will be comfortable with the detail work of integrating three companies into one.
“If the company was at a different stage, I might not be the right person,” she said. “… It takes a different personality to manage the process.”
She added that Mashinsky has a life in New York City, with other business pursuits. His wife is an East Coast corporate executive and they have a large, young family.
Swenson said she has an investor-friendly compensation package, consisting largely of stock options. Her salary will be $1 a year.
“I’ll break that up into 24 separate checks, twice a month,” CFO Mike Newman told investors during one of the lighter moments of the conference call.
MiFi Advantages
Swenson spoke to this reporter in her office on a recent Monday morning, as employees arrived for another week. She said she had just been on the phone with South Africa, whose time zone is the same as Eastern Europe and the Middle East.
She said there are still advantages to being in the MiFi hotspot business. It gives Novatel Wireless buying power and continues a valuable relationship with partners Verizon Communications Inc. (NYSE: VZ) and Qualcomm Inc. (Nasdaq: QCOM). The ideal disposition might not be a sale. It could be a partnership or a joint venture.
“We’ll have to wait and see what makes sense,” Swenson said.
Even if she had not landed the CEO’s job at Novatel Wireless, Sue Swenson would belong on a who’s who list of San Diego executives.
Born to a U.S. Navy family, she spent her early life moving around.
A career at Pacific Bell took her through 15 jobs in 12 years. She then went into the wireless business. Her many positions included chief operating officer of Leap Wireless
International Inc., the low-cost phone carrier based out of San Diego.
Her last CEO job was at Sage Software North America in Irvine, which she described as a turnaround.
Swenson also chairs the board of FirstNet, the federal First Responder Network Authority.
Swenson’s down time will find her engaging in a good walk in the vicinity of Swami’s beach.
During her short time as CEO, Swenson has spoken with many stakeholders, including investors concerned about getting Novatel Wireless back on its feet. They include Ned Shadek of Pioneer Investments.
He said company executives have talked a lot about getting into the growing Internet of Things market.
“I think talk is cheap,” Shadek said, urging the company to “just put numbers on the board and show us what you could do.”
Swenson, who swam competitively in her teens and into college, compared her new job with her athletic pursuits.
“I told people here I come from a long line of competitive sports and I never did it just to play the sport,” she said. “I did it to win.”
