Wireless broadband access solutions provider Novatel Wireless, Inc. (NVTL) on Thursday reported a profit for the third quarter compared to a loss last year, as quarterly revenues rose 20%. However, adjusted earnings per share for the quarter surged, and came in significantly ahead of analysts' expectations as well as the company's guidance. The company also provided earnings and revenue guidance for the fourth quarter. Following the announcement, the company's stock plunged about 18% in after hours trade.
In a statement, chief financial officer, Ken Leddon said, "We are pleased with our third quarter results that show steady improvement in revenues and GAAP EPS of $0.20, which was 43% higher than our guidance, due in part to a tax benefit of $0.04 during the quarter. Operating margins increased to 9.5%, from 0.5% in the second quarter of 2009."
The San Diego, California-based company posted net income of $6.22 million or $0.20 per share, compared to a net loss of $1.05 million or $0.03 per share in the prior-year quarter.
Excluding special items, non-GAAP net income for the quarter increased to $7.69 million or $0.24 per share from $0.31 million or $0.01 per share in the year-ago quarter.
On average, seven analysts polled by Thomson Reuters expected the company to report earnings of $0.10 per share for the third quarter. Analysts' estimates typically exclude special items.
Net revenues for the quarter rose 20% to $94.29 million from $78.40 million in the same quarter last year, and topped nine Wall Street analysts' consensus estimate of $92.55 million.
Operating income for the third quarter was $7.25 million, compared to operating loss of $2.44 million in the prior-year quarter, while total costs and expenses increased to $22.56 million from $19.10 million in the year-ago quarter.
Gross profit for the quarter surged to $29.81 million from $16.66 million in the same quarter last year. For the nine-month period, the company posted net income of $2.96 million or $0.10 per share, higher than $1.74 million or $0.06 per share in the prior-year period. Excluding special items, non-GAAP net income for the latest period was $7.21 million or $0.23 per share. Revenues for the year-to-date period declined to $248.79 million from $255.86 million in the same period last year.
Looking ahead to the fourth quarter, the company said its expects revenues in a range of $85 million to $95 million, GAAP earnings in the range of $0.04 to $0.12 per share, and non-GAAP earnings between $0.07 and $0.15 per share.
Analysts currently anticipate the company to report earnings of $0.10 per share for the fourth quarter, on revenues of $95.55 million.
NVTL closed Thursday's regular trading session at $12.19, up $0.22 or 1.84% on a volume of 2.46 million shares, higher than the three-month average volume of 0.98 million shares. However, in after hours trade, the stock traded down $2.15 or 17.64% to $10.04.
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