Zacks_Analysts' Blog : Novatel Launches HSPA+ USB Modems - Analyst Blog

Novatel Wireless Inc. (NVTL) yesterday announced the launch of its compact and light-weight DC-HSPA+ USB modem on Bell Mobility's Dual-Cell HSPA+ (DC HSPA+) network. The Ovation MC547 USB modem is based on the 3GPP Release 8 standard and will provide the next-generation, high-speed mobile environment.

By providing theoretical peak downlink data rates of up to 42 Mbps and 11 Mbps on the uplink, DC-HSPA+ will enable carriers to upgrade their existing infrastructure equipment and achieve significantly higher bandwidths.

Despite providing disappointing results, Novatel provided an extremely strong financial outlook for the ensuing fourth quarter. For fourth quarter 2010, management expects revenues to be in the range of $110 million - $115 million. Gross margin will be around 19%-20%. Non-GAAP EPS is expected in the range of 2 cents to 5 cents.

Recently, wireless giant, AT&T Inc. (T) joined hands with Novatel to provide Novatel’s MiFi mobile hotspot that supports up to five devices at once connecting via WiFi. Verizon Wireless (VZ) and Sprint Nextel Corp. (S) have already been offering MiFi gadgets of Novatel.

Verizon Wireless also started selling Apple Inc’s (AAPL) 3G iPad bundled with Novatel’s MiFi wireless hotspots from October 28, 2010. We believe that this will considerably benefit Novatel in the long run.

Currently, Novatel is a short-term Zacks #2 Rank (Buy) stock. Nevertheless, we maintain our long-term Neutral recommendation. Novatel faces stiff competition from Sierra Wireless Inc. (SWIR), which lost the mobile hotspot battle, but beat Novatel to the 4G acess cards when Sprint came out with Sierra's Overdrive hotspot earlier this year.

HTC's EVO 4G handset, which is based on Google Inc.'s (GOOG) Android operating system with in built MiFi mobile hotspot functionality, became the first 4G smartphone through Sprint.