Good afternoon, ladies and gentlemen. Welcome to the Novatel Wireless fourth quarter 2007 conference call. (Operator Instructions) I would now like to turn the conference over to Julie Cunningham, Vice President of Investor Relations. Please go ahead.

[Technical Difficulty] Leparulo, our Executive Chairman will cover strategic initiatives for 2008. As a reminder this conference call is being broadcast on Wednesday, February 20th, 2008 over the phone and the internet to all interested parties. The information shared in this call is effective as of today's date and will not be updated. During this call, non-GAAP financial measures will be discussed. Reconciliations to the most directly comparable GAAP financial measures are included in our fourth quarter and 2007 earnings release, which is available on the Investor Relations page of our website at www.novatelwireless.com. The audio replay of this call will be archived there for 30 days. Today's discussion may contain forward-looking statements. These forward-looking statements are not historical facts, but rather are based on the company's current expectations and beliefs. The company's actual results may differ materially. Please refer to our SEC filings for a detailed discussion of potential risk. Before I turn the call over to Brad, I'll provide a brief summary of our fourth quarter and 2007 results. For the fourth quarter, the company reported revenue of $118 million, a 53% increase year-over-year. GAAP net income was $11.1 million or $0.34 per diluted share, non-GAAP net income was $13.1 million or $0.40 per diluted share, which is $0.06 higher than our guidance. For the full year, the company reported revenue of $430 million, GAAP net income of $38.4 million or $1.19 per diluted share, and non-GAAP net income of $45.3 million or $1.40 per diluted share. Now I would like to introduce Brad Weinert, President of Novatel Wireless.

Thanks Julie. First I would like to take a few moments to review the highlights of the fourth quarter and full year, which was by all accounts, a banner year for Novatel Wireless. Beginning with the fourth quarter, Q4 was another solid quarter for Novatel Wireless, we achieved record revenue and unit volumes in the quarter, maintained strong gross margins, increased our operating margins and drove strong profits to the bottom line. Non-GAAP gross margins in Q4 topped our forecast at 30% and operating margins came in over 15%, once again above our long term target. Component issues had some impact on our ability to generate maximum top line revenues, but our bottom line performance clearly spoke to our ability to focus on profitable growth. Our next generation USB products continue to drive revenue and gross margins during the quarter. We are pleased with the ramp of our new MC727, the most innovative USB modem ever introduced with features like storage, GPS capabilities and Linux support. We made significant inroads into Europe with Vodafone, T-Mobile and Telefonica O2 with our MC950D, MC930D products. These products are the smallest USB products available in Europe. We also launched our EU850 HSPA modules with an embedded SIM slot and we added a new North American carrier to our customer roster during the quarter. For the full year, revenues nearly doubled year-over-year, net income grew at a very healthy rate and we finished the year with record earnings. Our cash position was also very strong, as cash in investments grew from $84 million to more than a $150 million at year-end. We are proud of these substantial improvements and the disciplined, profitable growth we demonstrated in 2007. We also strengthened our management team with the appointment of Ken Leddon to the role of Senior…

Thank you, Brad. First let me say that I'm very pleased to be part of the Novatel Wireless Management team and I look forward to meeting many of you in the near future. Unless specifically noted, our comments about financial results exclude the impact of share-based compensation expense under FAS 123R. Share-based compensation expense, net of taxes was approximately $2 million in the fourth quarter of 2007. Let's begin with the fourth quarter results. Revenues for the fourth quarter increased 53% year-over-year and 13% sequentially to $118 million. Despite very strong performance overall, revenues were $2 million lower than our guidance primarily due to timing of shipments and component constraints. Ovation products continue to show strength, accounting for $63.6 million or 53.9% of revenue. Embedded products were $21.9 million or 18.6% of revenues. With continue strong performance of our EV-DO products, which accounted for 69% of our revenues. HSPA products accounted for 31% of revenues. During the fourth quarter, we shipped to 13 operators and nine OEMs in 33 countries. Leading customers in the quarter included Verizon, Sprint, Dell, T-Mobile, Telefonica, Vodafone D2, Sony and Orange. From a geographic perspective, domestic revenue accounted for approximately 71% of total revenues and international revenue was 29%. On a non-GAAP basis, gross margins were solid at 30%, above the target we forecasted last quarter. Gross margins benefited from product mix and our focus on profitable growth. Operating margins were very strong again this quarter, at 15% of revenues, significantly above our long-term target. Operating expenses were at 50% of revenues compared to 16.2% of revenues in the third quarter, as we continue to demonstrate our operating leverage. R&D expenses were $8.3 million; this decreased as a percentage of revenues to 7% in Q4. Sales and marketing increased by approximately (inaudible) from the prior…

Thanks very much Ken. Over the last couple of years we led the high end of the market with innovation and expertise and focused on deepening our relationships with our carrier and OEM partners. We did this with an aggressive diversification strategy, by first diversifying our customer base, geographic reach, distribution channels and technology standards. And then taking an innovative approach to product development, often staying one or two generations ahead of our competitors, as wireless data has moved into broader acceptance that strategy has led to record results together with world wide market share, powerful distribution channels, brand recognition, and perhaps more importantly for the future, an install base of end users of Novatel Wireless products now numbering in the millions. There are a number of exciting trends that we believe will improve Novatel Wireless over the long-term. First, we believe that most of our key career customers are moving to a two-tiered approach to wireless broadband, pushing a more expensive high quality product to the enterprise and the lower cost product to the consumer. We have already seen the impact of these changes in the USB market, where we are the clear pioneer and technology leader. Sprint and Verizon are using our MC727 product for their higher end offering. At the same time that we continue to see robust sales of our first generation USB product, the MCD3000 had the lower end. Clearly the current emphasis is on driving the most data subscriptions possible and advertising dollars and subsidies have pushed lower end products, but we historically have now put our emphasis. Even yesterday, we saw evidence of this shift with Verizon's announcement of its low cost data plan, moving from $59 to $39 a month. This is the positive move that increases our addressable market. We'd be…

(Operator Instructions) Our first question comes from the line of Mike Walkley with Piper Jaffray. Please go ahead.

Great, thank you. I was wondering if you could provide us a little more color on some of the large opportunities you're talking about, that could make your revenue much better than $500 million for the year?

Sure this is Peter we're really looking at two initiatives one of them is really to enhance our current product portfolio. We've looked in the past at some software devices that really are complimentary to our devices, but what we're looking at now going forward are really solutions, one that we can assure demonstrable ROI to specific vertical markets that use our devices. And ones that solve real problems for IT managers, as there are more and more mobile devices that are out there in the field for them. So, that’s number one, we view that frankly as enhancing the sales of our current products. The second one which you might be referring to in a more focused way is, we also think that there will be a proliferation of devices that have delivered content by some other means which will move over to mobile wireless going forward. I can’t tell specific opportunities, but as you might imagine they involve things like navigation, MP3, video delivery, books, pin clients, along those lines that have been in related fields that we'll take with it a very different customer base under different business models moving forward.

Okay great. So it’s really the initiative, it’s a more seeing your new initiatives take off, than it is like a current bid that might hit in Q2 or Q3, I just wanted to clarify that? And then also if you could talk about the consolidation within carriers if you get more volumes [scale up in] carriers can you maybe discuss how that might impact your gross margins?

Hi, Mike this is Brad. Just to add a little color and repeat on the last statement, we do have -- and he was trying to (inaudible) there are real opportunities, there are real customers behind it and real contracts that are being put in place, and real business for 2008 and that's why we're concerned with making sure that we gave you a color to the guidance. But this is not a -- I figure you're asking me a question, whether this is immediate or more long-term, but we still expect that revenue in the second half of 2008 tied to these devices and this is very far down the road. Now, in terms of the consolidation, we certainly are seeing that in North America, as well as to certain degree in EMEA, where we have seen, first day, a division between consumer products and enterprise. And we certainly have seen the carriers over the last few quarters experimenting with that model. And I think they have come to a point now where they are moving forward with a definite division between enterprise plus products and consumer products for the retail stores. What we've seen, which is good for us, number one is that the service contract prices have started to come down, as was evident with the announcements that Verizon made yesterday, in dividing up their service contract pricing through retail and the enterprise. But, as well we are seeing that they are now willing to put longer-term commitments to volume at the consumer level, which makes this much more attractive and easier for us to manage going forward. And the inverse to is that that they are having to consolidate their supply and get through (inaudible) some inventory and things like that in Q1, which you'll be seeing -- which is evident on some of their websites already. But longer-term we think there'll be less selection, higher volume and better pricing.

Okay, great. Thanks for clarifying that Brad. And then just one last question, I'll pass it on. Can you just update us on the supply chain, how that might have impacted you in Q4 and how it's looking here in Q1 in terms of easing up?

Yeah Mike, we certainly did have impact in Q4, specifically to our EMEA products, just to clarify, that the part constraints that we had in Q4 and still going forward in Q1 are tied to our EMEA products, namely, mostly our MC950 and MC930D products. That will be resolved this quarter, we do not see going out of Q1 with any remaining supply constraints. But it did have impact on us, specifically in Q4, and really just to color this a little bit more what happens within a quarter is sometimes you'll have upside opportunities that appear, though I hate to use bluebird, but sometimes they do fly in and if you don't have the inventory to address that then they tend to go away. So within Q4 we had the ability to meet our demands, and we did, which is why we got to what we did, but we did not have any upside in terms of be able to meet additional opportunities as they came in. We are somewhat better in Q1, although we do have some constraints, but we do believe that we have upside even on EMEA in Q1 based on our current supply chain.

Okay. Thank you very much.

Thank you, sir. Our next question comes from the line of Matt Hoffman with Cowen and Company. Please go ahead.

Yeah thanks. First Ken start out with the housekeeper, could you provide the pro forma to GAAP reconciliations for cost of sales, SG&A and rest of the items are?

Yes, starting with the fourth quarter, operating expenses for about $2.7 million and provision for tax is about $800,000 benefit.

Okay.

Or net of 6.2.

What was first number I'm sorry I may have clipped out.

$2.7 million in operating expenses, that's about $600,000 in R&D, $500,000 in sales and marketing and about $1.6 million in G&A and then tax benefit is $815,000.

Got it.

You get an impact of 2023.

Okay great. So, Brad Sierra Wireless guided a pretty huge top line and maybe we'll make this competitor specific, but they got it a huge top line with lower margins for 1Q. Did they grab allocation of scarce parts from Qualcomm (inaudible) digits components to win share here in 1Q. And is part of your commentary about 2Q and 3Q kind of look forward to when your allocation gets a little better?

Yeah Matt, I'm not sure I can tell you exactly what the [bond] is that my competitors are using. And that well could be case, but remember that there are alternate solutions, as well and in different markets geographies and my EMEA was the one that was specifically impacting and certainly some of my other competitors saw the same constraints and others didn't. So, I would actually venture, yes, but may be they are not all using the same part, had an alternative part in some of the designs, that will make a little bit more sense to me, we spent an inordinate amount of time dealing with our components vendor in this particular part shortage and had affirmations that we are getting as much of a supply as others. This is short-lived and we don't see any constraints after Q1 with it. But certainly in terms of the impact to me, it was really more just upside and we don't think we lost any particular share, remember some of my competitors actually have customers that I don’t have. And compete in some markets that I don’t compete in. we think there is some strength there as well.

Okay this will eliminate Qualcomm as the primary culprit, since they supply most of the chips or if not all the chips for the data card market out there and give you something in the P.A states or another type of component there?

Yeah Matt exactly it was in the RF chain, the power amplifiers and those sort of things.

All right, last question here. Can you talk about your customer's concentration in the quarter? I know you gave us the 71% in North America. You also described a new North American win, what’s going on there, who are the 10% customers or whatever in the North American market?

Yeah I think that for North America well actually top 10% customers are going to be Sprint, Verizon and Dell, I think they were top 10% customers in the quarter, I think (inaudible) 10% customers, we had some close to that as well. So I am sorry the second part of the question Matt?

That’s exactly what I was looking for. Thanks guys.

Thank you, sir. Our next question comes from the line of George Iwanyc with Oppenheimer. Please go ahead. George Iwanyc – Oppenheimer: Thank you for my questions. When you look at $110 million guidance, how much is the component constraints still impacting you and how much is the flush through of the competitive products that you are seeing as well?

George I think that majority of it is actually flush through, I think that we actually are forecasting a fairly robust quarter in Europe in Q1, which will have some impact on our gross margins, as we talked about during the script. So for me it’s really more a function of some inventory levels being taken down and certainly some product lifecycle changes. But again, let me just paint a different picture, that the other thing is that the recent events that have to do with the service contract pricing, we're looking at that as a positive event and then none of that this is factored into our guidance at this time. There hasn't been enough that has passed. So, this is something of we have been waiting for quite a well. We actually think this will trickle to the other carriers in the near term. I think there is lot to drive revenues actually in the near term. George Iwanyc – Oppenheimer: Do you expect the flush through to be out of the way by the time the second quarter comes around?

I have had, George we had direct meetings with our customers and they have every intend of this being a one quarter event. George Iwanyc – Oppenheimer: Okay. And when you look at the full year number that you're comfortable with the $500 million, how much of the new initiatives are contributing in this second half? Or is that something that we should more look at as a 2009 contributor?

No, I think that what we are communicate in the script is that the exceeding $500 million is with the current products and current courses of the events. So we believe that the upside to that are these initial initiatives, so none of the additional initiatives which we do expect to have significant revenue line in the second half of the year are included in our number at this time. George Iwanyc – Oppenheimer: Okay. And when you look at the efforts that you are putting both there, do you anticipate having to ramp R&D or are you currently already spending to accomplish that? And what type of impact do you expect to your gross margins?

We're going to say within our model, so we would look for operating expenses to never exceed 20% during the year, right now we are running much lighter than that. However in R&D, it's a function to a certain degree of certification expenses. So Q4 was probably our lightest quarter of the year in terms of R&D expenses. But we are going to be ramping in Q2 and Q3 towards platform accreditations cycles again like we do every year with our major OEM customers. We certainly do see some impact on R&D with these new initiatives, but that's built into our operating plan actually. And most of the way that we do R&D is a contributory effort. So we do a base development and then those base developments are applied across multitude of platforms. So we are not doing multiple developments, because we have multiple devices. So we have a core element that gets transferred across a lot of different devices, which gives us really good efficiency. So we would expect some impact, but it would not be anything that would be out of the norm and certainly would be within all of your models, looking at our current operation model. George Iwanyc – Oppenheimer: Okay. And one final question. The 28% gross margin guidance, how much is that entirely mix or is there another influence going on?

George again, just as what last quarter were, I think we guided 29% and we came in it 30%. We were heavier in North America at the end of fourth quarter than we had anticipated. Again in Q1 we have a heavier forecast for EMEA. And given the current view, we believe that will have an impact on gross margins. That's really the only impact you'll see in Q1 on gross margins, it is the fact that our product mixes is very heavy right now. MC950D and the newly launched MC930D have lags right now and we are doing well. George Iwanyc – Oppenheimer: All right. Thank you.

Thank you, sir. (Operator Instructions). Our next question comes from the line of John Bright with Avondale Partners. Please go ahead.

Well, thank you and good afternoon. Ken welcome. Ken on the $118 million versus $120 million guidance, you mentioned timing, as well as component shortage associated with that. How of that was timing if component shortage -- was most of it timing and was this an EMEA customer, what caused that $2 million differential versus your original though process?

It was primarily the timing, the time of the arrival, the products versus satisfying the order and getting the order in by the end of the quarter. We were very close and just a little bit of delay caused us a couple million bucks.

And John just to add, that's revenue recognition issues for the most part and again I think upside was the thing that we were mostly, limited to in terms of (inaudible) in the quarter. We were able to fulfill all of our demands that was forecasted, again some of them came in a little late which caused some of the revenue to be pushed out into the first quarter.

Okay. And then on the tax rate Ken, for the fourth quarter looked to be a little bit lower than normal. Was there something, what enabled that?

Yeah this year, we were able to take it advantage of deferred tax benefit, related to one of our foreign operations. And secondly we related to some of the accounting in the foreign operations, we were realizing effect of some favorable foreign currency translation impact, on our tax attributes. So we see this as something that's kind of catch up for the year, as we made money and were able to use more of deferred tax benefit, and as we experienced some appreciation in our investments in Canada versus US, we realized some currency gains, but we wouldn’t forecast that going forward.

Okay, And Brad when you were talking about the excess inventory at some of the carriers today and needing to flush that through, we can make the safe assumption that's an economic impact, that they just haven’t got the inventory they wanted to get through or is this a result also of them moving to two vendors looking forward?

I think it's a combination of both John, I think mostly it's excess inventory, certain customers and I am unfortunately not one of the lucky ones who was able to get volumes commitments or volume orders, where they would take bulk shipments, but I know its for fact that there were large amounts of certain platform sitting in some of the carriers. And the carriers have gone through a round of trying to become more sensitive to costs, going forward too. And there was a concerted effort at the end of Q4 and going in to Q1 to reduce inventories at the retail locations, as well as in their stores. And we're seeing some of that stock being pushed through and it’s not only USB devices plus the inventory of older, what I’ll call legacy devices now PC cards and Express cards, which are getting moved. In some cases ahead of other products, through incentives, through the sales people and lower costs, but we do think that this is very short-lived and you know the carriers were already fairly lean on inventory and it’s really more a case of getting rid of what you would call obsolete inventory than anything.

Okay. And then my last question, regarding the consolidation to suppliers and the carriers doing this on an enterprise basis and consumer basis, this is taking place domestically correct? One, and your focus is going to be more on the enterprise side is that correct, or you're looking to be a vendor? They are looking to consolidate vendors to two vendors for both platforms or two per?

Yeah, that’s two per. So what you'll typically see is that the enterprise is little bit more tricky, because enterprises do standardize on a particular platform, so you'll have the insurance company able to standardize a Novatel cards and the insurance company would be able to standardize on competitor wise cards. So to some degree you'll always have some legacy there. But going forward what we've been participating in is negotiations to get 55% of the business versus 45% of the business (inaudible) 60/40 for a specific line of products. We're going after both, okay. And we have clear indication actually that we have both in at least one of the two markets. What's allowed us to go after the lower tier, and again, I hate to use word lower in this, because its really just higher volume, less featured product, we still think that we have a good opportunity, given the commitments that the carriers now look like they're willing to make. They're being able to have the same type of margins, structures within reasons that we have today. The same is true by the way John in Europe, however, the market is different, I'm not going after the low end there, we are still specifically going after the high end business and the enterprise business and the innovation business in Europe, the low end is not an area that fits into my business model. The low end or the retail end in North America does. We've been selling the MCD3000 which is our legacy USB product through the Verizon channel now at the low end for couple of months with what we feel are fantastic volumes right now.

Well, one last, I couldn't go without giving one to Peter. Peter in last call $500 million was mentioned as the top line bogey for 2008 and I think you said, if we didn't do $500 million we will be quite disappointed. You mentioned $500 million today and that's before the several potential new opportunities for 2008 that you think could augment those sales. What would you say your degree of confidence is in visibility at this juncture given the playing field as it now stands?

Let me answer like this John, because it's a little tricky to give a degree of confidence. But the broader context is this, in the second half of the year we will have multiple revenue drivers on two fronts, really on our core products with the first initiative we will have many different form factors being commercialized in the second half of the year. That’s one of the revenue drivers. As other revenue drivers are these other opportunities. They are coming in closer on the sale cycle, some of the sale cycles are very close, but you hesitate to go through these things until everything is pick and tied at the very end. I guess what I would say is they will come more into visibility in the next couple of three months to refine that a little bit further the annual number for the year.

Does the overall business model goal remain 30, 20, 10?

Absolutely. I mean we tried to focus on operating margin, but our target business model is 30, 20, 10 and there is also within that John there is a variety of levels of confident, some I would put at the high confidence level, that as we suggest before we believe that we will see revenue from this new initiatives at the end of the year and others are earlier in the sale cycle.

Thank you.

Thank you, sir. Our next question is from the line of Samuel Wilson with JMP Securities. Please go ahead.

Good afternoon, several questions for you today. First can you just give us an update on the embedded market? And overall what your thoughts are on the market and if you start to see any sort of activity around Gobi at all in terms of lowering various [entrants]?

Sam lets start with that, this is Brad. The embedded market for us quarter-to-quarter was flat. We continue to see demand, we are kind of in between platform releases. Our major platform cycles with Dell, which is by far our major customer in the OEM space. They dwarf everybody else and we finished that, I think we have 27 new platforms shipping now with Dell and if you do the permeations for that some of them are shipping with five or six different carrier configuration. So, it was a banner year in terms of that is concerned and now we are reaping awards. We believe that OEM is going to be around 20% of our business, and certainly you will see fluctuations to that as new products are launched and new programs come into place. We've had several discussions with partners about Gobi. We have couple of opportunities which we're addressing right now. We have not closed any business as of today, specific for that platform, but what you have been seeing, is it's tending to be incremental or incidental. We haven't had anybody come to us yet and say they want to standardize on Gobi. But they are looking at it in specific applications. Some of my smaller OEMs are looking at it as an attractive way to penetrate in a global way that they weren't looking at doing before, because they were focused on North America for example. So, we anticipate having Gobi business going forward in the near future. Remember it will be commercial I think. Right now, the target is some time in Q2. We would anticipate being participatory in that launch with the lease line customer at this point.

Great. And then just some housekeeping questions. Headcount for the fourth quarter and expectations on hiring here over the next several quarters?

Headcount, this is Ken speaking, Sam. Headcount is at 390 at the end of fourth quarter and hiring will be started in some of the R&D areas and we will ramp up later in the year across the organization.

Overall, we will still maintain a very disciplined hiring practice and a very disciplined business model to keep the leverage going to the bottom line.

Okay. And then cash flow from operations and CapEx?

Okay CapEx, you want the quarter?

Yes please. Fourth quarter.

Okay, CapEx was $16 million for the quarter and what was the second question?

Cash from operations, did you say 16, one six million?

Sam, let me repeat. The fourth quarter was $2.5 million for the quarter and $16 million for the year on CapEx.

And cash from operations?

Cash from operations was $50 million as far as actual increase in cash and then EBITDA was $75 million and free cash was $57 million for the year. For the quarter, cash flow was $84 million, EBITDA was $20 million and free cash was $18 million

Perfect. Thank you very much gentlemen

Thank you.

Thank you sir. Our next question comes from the line of Kevin Dede with Morgan Joseph. Please go ahead.

Good afternoon guys.

Good afternoon.

Would you mind giving us a view to major North American customers, Sprint and Verizon obviously you have got great relationships with. But on the AT&T side, where do you think your position vis-à-vis the enterprise market versus the consumer market and how would you characterize the competitive environment. Granted, you've said that you think the carriers are pairing down their suppliers, but how does it look in the fourth quarter, where do you think that and how do you think that changes?

Sure Kevin thanks. First AT&T has not been a main customer for us for a couple of years now. We made a considerate business decision probably about a year ago that their current requirement synergy didn't stay within our business model and we really expected that. To be completely honest, we haven't been able to see a margin that was attractive enough to do business. We believe that that's going to change in the future and actually have a fairly concerted effort going on to deliver some innovative products into that particular market in 2008. Stay tuned, because that's not a sort of model or forecast to this point, because they're currently not a customer for us. The only business I do with AT&T today is through my embedded customers, so it's through Dell and Panasonic, Toshiba and the like. So it's relatively light. My understanding is that it's almost a one vendor show there right now, and certainly that particular competitor has done very well. But again, there's opportunities and there is opportunity costs and into this point, we've seen the cost outweighing the benefit, let's put it that way. We keep on looking at that, but it did not fit into my business model last year.

Okay. And how about the consumer versus the enterprise market? Your competitive position at Sprint and Verizon?

So at Verizon I think its fairly clear. We currently have the retail product with our MCD3000 and our enterprise product, the MC727, both doing very well. At Sprint, we currently are shipping the 727 equipment, so we are addressing the enterprise. However, we think there is an opportunity there to gain some business with a consumer play as well. We are looking at that and we certainly think that there is an opportunity. So right now I have enterprise in both customers and I have the retail at Verizon and certainly as this dust settles and the consolidation starts to become more clear, I think that will end up in a good shape both places.

Okay. Can you give us a view on how you're seeing pricing trends through the fourth quarter in Europe and North America? And what your expectations are going forward?

Yeah pricing remains a constant, something we are constantly vigilant on. The good news is that we've been able to keep our operational goals in line with cost reductions, ASP reductions. We haven't seen any abnormal pressures, but we are seeing a trend to have a bifurcated product line though. It's a lower cost product and a higher feature product and that's actually we are gearing our roadmap. But in most cases, we are seeing the same sort of ASP pressures that we've seen in the past. So, we've been running on the 10% to 12% ASP reduction year-over-year, as we continue to watch, but today we've been able to keep up with that with cost reductions.

So can you give us a little more background on the strategy of the 930D, and why you decided to hone in on just one HSP frequency band?

Yeah absolutely Kevin that's a very opportunistic play. We had several partners in Europe that said we are not really interested in the US bands, we have a lot of customers who stay within country. We are addressing this as a broadband Internet access play. So we are seeing this being very attractive, and its a lower cost. This does significantly reduce the bond costs of the product by reducing them to radios. So we are able to offer a lower price to the customer. We are seeing a lot of traction right now in developing countries and in Eastern European countries, where cost is more of an issue and roaming is not an issue. We also have seen a couple of opportunities where our partners, they compete with larger carriers, they are using from a cost savings benefit to compete in (inaudible) cost solutions. So we think it's complimentary and we've been selling most of them more in to the eastern areas of Europe to this point.

And last question from me, just some insight on where product design and industrial looks kind of go, I mean you seem to think that second half will be driven by these core products and the transformation there and obviously you are baking in some pretty good revenue growth in the second half. So give us an insight on why we should be comfortable believing you on this.

Oh sure. I will let Peter finish this, I just wanted to -- something I had forgotten to point out when earlier question was asked, is that one of the other things that's come up with our discussion with the carriers is that as they have been able to start to guarantee more visibility and more volume, they've also asked for more closer partnerships in customization and like you will see from us going forward in 2008 are going to be carriers specific launches. We've some pretty innovative products that might have been co-developed or jointly developed with Novatel and one of our carrier partners. That is something that I think is very near term coming to fruition. That's a side benefit from this kind of new world that we are starting to plan. And I will let Peter kind of go forward on the form factors and discussion in terms of what that looks like in the second half.

It's based on what we see evolving is products with an ecosystem around them. So a device which is tied to a content, which is tied to service, which is tied to application and like I said these includes things like MP3, navigation, video, books, thin clients. So the form factors will all evolve around those as they move to wireless mobility arena. So, some of them will be, the form factors will be things that you've seen out there in another arenas and then migrating that over into wireless mobile devices. That’s what we see happening and there are several places in that ecosystem that we believe that we can participate with our technology partners on it.

Well forgive me for being a little thick on this Peter, but it’s still kind of hard for me to visualize exactly what you're taking about, I mean I understand your new initiatives and your MP3 products and video and books and even digital signage I think you referred to in the past, but I don’t understand how that is leveraged off or how that is well or how that’s related to your second half expectations in the growth of your core products. These products I understand are upside for you but what I am looking for is some solid footing on where you see your core products going aside from their career specific relationships that Brad mentioned?

Got it, so you’ll see form factors become obviously smaller, slicker on some of our core products, you’ll see some of that functionality that I talked about brought into our core products, as well. And you'll see digital applications actually from those core products apart from simply being able to get access to internet and access to email and corporate networks, that might be little bit vague but frankly I am waiting enough for as they come forward rather than right now.

No I understand a hot button for web access and a corporate VPN that makes sense. I appreciate you indulging me Peter thank you

Sure

Thank you sir. Our next question comes from the line of Anthony Stoss of Craig-Hallum. Please go ahead.

Hi, guys. Just to get little bit more clarity in a couple of things. Peter, if you wouldn't mind, you're biggest competitor didn't mention any budget flush, can you let us know also if its either Verizon or Sprint or both and why do you think you're based competitor never mentioned in their call recently? That and a follow-up question.

Sure. I mean, I can't speak to that, its certainly in North America and on the major carriers in North America, so yes, we see this happening, this consolidation taking place within both North American operators.

Okay. And then Ken, if you wouldn't mind take us through the stock comp by category again, not just rounded I guess if you could?

Okay. For the quarter?

Yeah.

Research and development, $638,000, sales and in marketing $471,000, G&A, $1.574 million, total $2.683, and there is a $155,000 in the gross margin line also, and its $815,000 tax benefit for a net FAS 123 impact of $2.023 million.

Okay. Peter or Brad, you'd might commenting about inventory levels in Europe, we talk about here in North Americas, what's your view on where you stand overseas? Thank you.

Sure. We have no inventory overseas, we are continuing to ship as fastest as we can product there. We haven't seeing any inventory issues in Europe They tend to be they have caught up and moving ahead of North America in terms of 3G products for sure. Certainly same tractions applying over there where the retail lower end price is getting the highest volumes, we are playing in to the enterprise level obviously and in higher end positions where we can compete against that, some of the higher volumes competitors. But we had no inventory at all we are selling through stuff as fast as we can ship it right now.

Okay. And also I didn't I am not sure if I missed or not, but the couple of big deals that you are working on new verticals and such, are they above corporate average gross margins. Did you say?

Yeah current rejections are where we placed them in the higher end to above the current goals that we set for the company. These certainly are lucrative deals and these are - just to reemphasize this is not, this is - these are realistic real things that we have very close to fruition yeah.

None of them are currently signed is that true?

We can't speak to the legit

I am not jinxing anything at this point.

Okay. I'll jump back in the queue. Thank you.

Well, thanks Larry.

Thank you, sir. And our final question comes from the line of Brian Blair with Wedge Partners. Please go ahead.

A little bit about some of the emerging market opportunities you might be seeing, other than some of the areas you've already mentioned. You know as PC and as laptop prices are dropping in places like Latin America and other parts of the world. I'm wondering if you've seen carrier interest in any new markets that might provide opportunity for you maybe later in this year into '09?

Hi Brian, this is Brad. Absolutely. It's a good question and we do continuously see opportunity, and a lot of it comes to do business model. Again we've seen very large opportunities in some of the advancing and developing nations like India and China. However they have not been profitable to any degree. Where we've really focused our efforts has been more in the Eastern Block, LatAm, the Australian/Asian region where we've seen some fairly good indications even in the, I guess you can call it the -- the Australia/Asian, but the Indonesian area, the non-China Asian markets so seem to have some differential. But really right now the two bids or the two ones with the biggest potential that are the shortest hanging fruit if you will is the Eastern Bloc., Russia certainly is something that's it has lot of potential, then we are seeing the Middle Eastern markets start to pay some dividends as well.

And do you think it's like where we could see some may be meaningful carrier if not carrier announcements, may be mentioning meaningful shipments to those types of customer later this year or do you think it's just something that you're starting to see now that you recognized longer term can be an opportunity.

Yeah I think that we are probably a ways away from them getting to 10% customers, and really most of them are being handled through distribution partners right now where we are going and doing business development and then we are handing that out to a local distribution partner. However, we are now starting to see the units ramp in to thousands, the tens of thousands units for some of these markets. So while it's not nearing 10% customer yet, it's certainly becoming significant. And if you probably add it all together, it's a nice piece of business, and typically the gross margins are good in those particular markets doing as well.

And lastly have you seen data prices in those markets? Are the data prices starting low enough, so that the consumers can may be consider the wireless modems, is it really more of an enterprise focused effort.

Well in fact it's almost like our customers even in like the Vodafone operating companies like to have Vodacom in South Africa and other nations where there is not a lot of infrastructure, are selling these products not only as a mobile solution but selling it as the only broadband solution available.

Exactly that's why I asked. There seems to be a trend that you guys can benefit from but I know it's in its infancy.

And you really run in to ones that tend to have the biggest opportunities, the ones that are most price-sensitive. So you probably have this catch 22. So we've been doing fine in the ones that are more than just developing nations that have some infrastructure or some autonomy in place that can afford a little bit more of our monthly service contract than some of the third role factory. So there are opportunities out there but you got to be careful that you remain profitable.

Right, right okay great thank you very much

Thank you Brian.

Thank you Sir. And Mr. Weinert you may continue with any closing remarks.

Well thank you. Again thanks for being on the call today. We very much appreciate all of your support and interest and we look forward to updating you very shortly.

Ladies and gentlemen, this concludes the Novatel Wireless fourth quarter conference call. If you would like to listen to a replay of today's conference, please dial 303-590-3000, or 1-800-405-2236, entering pass code 11107528. Once again if you would like to listen to a replay of today’s conference please dial 303-590-3000 or 1-800-405-2236, entering the pass code 11107528. ACT would like to thank you for your participation. You may now disconnect. Have a pleasant day.