October 29, 2009 / 9:05 PM / 10 years ago

UPDATE 2-Novatel Wireless Q4 rev view below Street; shrs fall

* Sees Q4 rev $85 mln - $95 mln vs est $95.69 mln

* Q3 EPS $0.20 vs est $0.10

* Q3 rev $94.3 mln vs est $92.6 mln

* Sees Q4 EPS $0.04 - $0.12 vs est $0.10

* Shares down more than 18 percent (Adds details, CEO comments from call, updates sgare movement)

Oct 29 (Reuters) - Novatel Wireless Inc NVTL.O posted strong quarterly results but warned that sales of its flagship mobile wi-fi product would be flat to down sequentially, sending its shares tumbling more than 18 percent.

“Fourth-quarter guidance reflects a flat to modest decline in MiFi sales as improving sell through catches up to sell in on initial stocking orders,” Chief Executive Peter Leparulo said on a conference call.

Novatel’s MiFi — its flagship wi-fi device — was expected to continue gaining traction as wireless carriers upgrade their networks in 2010 through 2013.

Third-quarter MiFi sales were $37.9 million, or 40 percent of total revenue, in its first full quarter of shipments, Leparulo said.

Although the company’s third quarter revenue beat analysts expectations, the weak MiFi sales view led to fourth-quarter revenue outlook coming in below estimates. [ID:nWNAB7007]

MiFi is a battery powered portable network device that converts a cellular data signal to a wi-fi signal, enabling products such as a laptop computer or a Nintendo game device to access the Internet.

Shares of Novatel were down more than 18 percent at $9.95 in trading after the bell. They closed at 12.19 in regular trade Thursday on Nasdaq.

Mifi sales cycle are longer than its USB products due to higher retail price points and higher sales training.

Growth in MiFi sales is expected to resume as carriers work through their initial orders, step up training and promotional activities and eventually reduce the retail costs to end usrs, Leparulo said.

MiFi sales in Europe were weak as operators typically offered full rebate programs meaning that devices were sold at subsidized prices, he added.

MiFi is launched with Vodafone (VOD.L) in Europe and with Verizon Wireless, a joint venture between Verizon Communications (VZ.N) and Vodafone. In United States, these two carriers contributed 26 percent to Novatel’s revenue in 2008.

In the third quarter, Novatel earned $6.2 million, or 20 cents a share, compared with a loss of 1 million or 3 cents a share in the year-ago quarter. (Reporting by Savio D’Souza in Bangalore, Editing by Saumyadeb Chakrabarty)

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