Novatel: JMP Advises Getting Out; Kindle Is Not Enough
Novatel (NVTL) shares are down hard this morning after JMP Securities analyst Samuel Wilson downgraded the stock to Market Underperform from Market Perform.
For the year through yesterday, Novatel shares had rallied 34.7 percent; Wilson notes that the wireless networking equipment company has gotten a boost from its role providing components to the Amazon (AMZN) Kindle 2 e-book reader. But Wilson says the Kindle 2 will contribute at most $10 million a quarter to Novatel’s revenue, “not enough to fill the hole left by the drop in demand in the PC and USB adapter business.” Novatel declined to talk about the Kindle on its post-earnings conference call last night, but did say that Foxconn, which manufactures the Kindle, was a 10 percent customer in Q4.
After the close yesterday, Novatel reported Q4 revenue of $65.1 million, slightly above the Street at $64.9 million, but down from $118 million a year ago. The company posted a non-GAAP loss of six cents a share, a penny worse than expected.
