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Novatel to Boosts its MiFi Platform

Zacks Equity Research

Novatel Wireless Inc. (NVTL) – one of the leading manufacturers of wireless data modem – strengthens its MiFi Intelligent Mobile Hotspot platform by enhancing its devices with advanced software.

Addition of the new software will not only extend the device’s power backup, but will also boost network speed. Overall, the integrated software will drive the modem’s usage performance by nearly 50%, hence enhancing its user experience.

Novatel is one of the leading brands to offer MiFi devices to its customers. Higher usage of smartphones and tablets has forced major telecom operators like AT&T, Inc. (T) and Verizon Communication Inc. (VZ) to offer shared data plans to its subscribers

In the U.S., the concept of shared data plans is gaining huge popularity. With the growing popularity of shared data plans, the demand for MiFi devices will also increase as these devices from Novatel are used to create mobile hotspots supporting five devices. The company already supplies its LTE-based MiFi devices to the top three carriers in the U.S., namely, Verizon, AT&T and Sprint Nextel Corp. (S).

Despite the popularity of its MiFi modems, Novatel reported dismal financial results for the fourth quarter of fiscal 2012. Both its top and bottom line missed the Zacks Consensus Estimate. Total revenue in the reported quarter stood at $70.7 million, down 35.6% year over year. Such a poor performance of the company is mainly attributed to stiff competition from the low-cost Asian manufacturers, including ZTE and Huawei Technologies. Moreover, in recent times, most smartphones have inbuilt hotspot facilities, thus completely bypassing the need for any MiFi modem.

In order to boost its top line, the company is continuously upgrading its software and launching innovative devices. Recently, Novatel launched its new LTE-enabled MiFi 2 that provides a touchscreen. Going forward, it is to be seen whether the company can survive the intense competition.

Currently, Novatel Wireless has a Zacks Rank #2 (Buy).

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