Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Novatel Wireless second quarter 2008 conference call. (Operator Instructions) I would now like to turn the conference over to Julie Cunningham, Vice President Investor Relations and Communications. Please go ahead, Madam.

Good afternoon, everyone and thanks for joining us. The agenda for today’s call is as follows: Peter Leparulo, Chairman and CEO, will provide an overview of the second quarter of 2008; and Ken Leddon, Chief Financial Officer, will review our preliminary financial results for the second quarter. Also joining us on the call is Brad Weinert, our President. As a reminder, this conference call is being broadcast today on August 19, 2008 over the phone and Internet to all interested parties. The information shared in this call is effective only 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 preliminary second quarter 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 contains forward-looking statements including our preliminary financial results for the second quarter and our outlook for the third quarter of 2008. 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 could differ materially. Please refer to our SEC filings for a detailed discussion of potential risks. Additionally, as previously announced, the company’s actual results may differ materially as a result of the outcome of an ongoing accounting review as described in more detail in our preliminary earnings release. Now I would like to introduce Peter Leparulo, Chairman and CEO of Novatel Wireless.

Thanks, Julie and thanks to all of you for joining us today. As Julie stated, we are providing preliminary financial results for the second quarter of 2008. These preliminary results are subject to change as a result of the audit committee’s ongoing review of the company’s revenue cut-off procedures, internal control, and accounting for certain customer contracts. With that in mind, revenues for the second quarter of 2008 are expected to be approximately $89.8 million. Earnings per share on a GAAP basis for the second quarter of 2008 is expected to be approximately break-even, significantly impacted by the cost of the audit committee’s ongoing accounting review. Our preliminary second quarter results include approximately $3.4 million of revenue and approximately $131,000 of pretax net income that was previously included in our first quarter results, which were announced on May 1, 2008. Non-GAAP EPS, which excludes stock-based compensation, is expected to be approximately $0.03 per share. Second quarter results on a pretax basis include: an inventory valuation write-down of $1.7 million in cost of goods sold; a bad debt reserve of $900,000 in G&A; and fees and expenses related to outside professionals in connection with the accounting review of $2.6 million in G&A. The non-GAAP EPS impact of these items totals approximately $0.11 per share. Today, I would first like to give you a brief update on the status of the ongoing review by our audit committee. After that, I will walk you through some of our key initiatives, which we believe will lead us to return to growth in the fourth quarter. As previously announced, the audit committee is conducting an expanded review into the company’s revenue cut-off procedures, internal controls, and accounting related to certain customer contracts. During the course of the review to date, six transactions have undergone further…

Thank you, Peter. Before I provide the second quarter preliminary results and third quarter guidance, I would like to add to what Peter said earlier regarding the accounting review. Pending the completion of this review, our preliminary results for the first and second quarters of 2008 remain subject to change, to reflect any adjustments resulting from the review, which could be immaterial. Additionally, our first and second quarter results may be adjusted for changes in quarter ending accounting estimates, including estimates of inventory, accounts receivable, and other items resulting from better information about these items that will be available at the time the Form 10-Qs are filed. We continue to work diligently with our auditors to finalize the financial statements for the first and second quarters as soon as possible after the review is completed. The professional fees and expenses related to the review that were incurred through June 30 2008 total approximately $2.6 million on a pretax basis, significantly above our initial expectations. Turning now to preliminary second quarter results, unless specifically noted, all comments about our financial results exclude the impact of share-based compensation expense under FAS-123R. Share-based compensation expense net of taxes was approximately $1 million in the second quarter of 2008. We currently expect to report revenues for the second quarter of $89.8 million, which compares to $97.4 million reported in the June quarter a year ago. As a result of the preliminary conclusions from the review, these second quarter revenues include approximately $3.4 million that was previously included in our first quarter results announced on May 1st. Now let me provide a few key metrics associated with our second quarter sales -- USB products are expected to be approximately $48.2 million, or 54% of revenues. Embedded products are expected to be approximately $29 million, or…

Thanks, Ken. Although this has been a challenging period for Novatel, we are confident in our path forward and believe it is validated by the design wins, commitments, and level of enthusiasm from our partners for our next generation products. We do look forward to demonstrating our progress over the next few quarters with you. And now Ken, Brad, and I are happy to answer your questions. As a reminder, we will not be able to respond to questions regarding the ongoing audit committee review but Operator, please open up the line for questions.

(Operator Instructions) Our first question comes from the line of George Iwanyc from Oppenheimer.

When you look at your guidance, can you give us an idea of how the gross margin is breaking down between the various categories and where you are seeing the biggest pressure?

We actually don’t break gross margins down by either product or category, other than generally. And what we talked about in the past is that embedded gross margins, albeit with lower selling expenses, due tend to have lower gross margins and the other higher content technology products are higher gross margin products. But the real impact -- gross margins are always very much dependent on mix and are subject to quarterly fluctuations. Where we stand right now is that we are between product cycles. The biggest effort and initiative that we are undertaking is to roll next generation products out with our operator customers. Those products will have higher gross margins associated with them pretty much across the board, mostly because they are next generation and because we believe that they will be more highly differentiated products. So in some way, I would say it is dependent on product mix and it really is the end of the lifecycle of our current products that we are going through the beginning stages of an upgrade cycle, which are the most impactful on gross margins.

So with all the new product activity that you are going through right now, how should R&D trend next quarter, and then in the fourth quarter? Is it increasing and then decreasing? And do you see the same type of trend with sales and marketing expenses?

In the third and fourth quarters, we do see an increase in the R&D expenditures as we bring the new products online. Sales and marketing will grow as the market grows, due to commissions and compensation related issues due to the growth and the new products coming online.

Okay, and then one more question on the guidance -- the decrease that you are looking for, is that coming primarily from embeddeds during the drop-off? Or is it just the new product transition? And following up on that, how do you see embedded trending over the next 12 months?

I’ll take the first part of this -- there is some softness in the market, which is somewhat due to seasonality in the summer, especially in Europe, so there are those macro elements. But principally, our guidance reflects the move to the new product launches to drive sales in Q4, which will have higher gross margins associated with them. Because we are in between those product cycles, that’s the principal driver of our guidance. Moving forward, we are rolling out a lot of products in all of our markets over the next several months and several quarters, including evolutionary products as well as mobile content devices. We expect that as we transition forward to that, we will see the results in Q4 on that. I will turn the embedded over to Brad, actually.

On the embedded side, we certainly are still seeing robust demand across our existing customer base, although we do anticipate some of our laptop OEM customers to migrate to alternate chipsets and alternate modules going forward. However, we are seeing an increase also and additional new opportunities across what we call content-specific appliances and vertical markets. So we are replacing some drop-off. We might be seeing a laptop OEM with new customers, so the overall demand for OEM is actually very robust. And as we mentioned also in the script, we are going to be introducing a new module as well, so there are product lifecycle changes happening across the board, including in the embedded space right now.

Brad, just following up on that, have you seen any of your embedded customers on the laptop side start to embrace Gobi? Is this something that will impact mix in the next two quarters?

I think the Gobi is being embraced unilaterally at this point at varying levels within a given customer but certainly, I’m not aware of any OEM that does not have plans to use Gobi in certain platforms. But we also see other modules being used there as well, so we are seeing more of a differentiation between platforms based on what the applications are, so certainly the laptop platforms that are truly geared towards a global roaming solution are migrating towards Gobi, but a lot of the ones that are being used more in a nomadic application are using Novatel modules or other modules. So there are changes happening. It really depends on laptop OEM to laptop OEM but that being said, we certainly are and have declared ourselves to be and are very much involved with the Gobi program. We do see opportunities there as well going forward, with both sales of hardware as well as potential software and other solutions to some of our customers.

Thank you.

Thank you. Our next question comes from the line of Matthew Hoffman from Cowen & Company. Matt Hoffman - Cowen & Company: First, Peter, could you add a bit more color on the new product status? I think you indicated there was a regulatory issue that was creating a bit of a product slip here from 3Q to 4Q, but maybe you indicated it was outside of your control. Now, you’re not suggesting that it’s more on the chipset side but more on the appliance side of the equation there?

Matt, what it really is -- we framed in terms of regulatory/technical. What it really is that -- it certainly is external to Novatel, as you say. There are fixed elements of both certification and regulatory approval that overlap and have continuum to them and have interlocking elements and that’s really what -- that is one of the principal drivers of it. That does manifest itself in things like protracted firmware development as you go through that but it’s really the -- well look, we have done everything under the sun to pull in the development of these new products but what we are running into is the [fixed parts] of the entire development and certification cycle that really cannot be shortened. Matt Hoffman - Cowen & Company: What’s your level of conviction that these issues do get resolved here in 3Q, or in time for 4Q sales of the new products?

Good question. There’s always active dynamics on this as you go through the last elements of certification but based on what we have seen, having launched many, many products over years, is that we are confident that we will get these into the market in the fourth quarter. I can tell you we already have launch commitments on these products from principal customers, so not only we but others are counting on us doing it as well. Matt Hoffman - Cowen & Company: All right, another question here; looking forward, it looks like G&A was maybe a $0.07 to $0.10 hit in the second quarter. Obviously the profit is little light here in the 3Q guidance also, and I think Ken gave us some pretty specific numbers there. That 7.3 G&A for 3Q, is that really -- a lot of that is the accounting review, maybe $3 million or $4 million worth? And are you pretty sure that that’s the right number? It may not go higher, it may go lower -- what are the pushes and pulls on that number? Thanks.

On the G&A, as we said in the press release, I believe, there’s $2.6 million in Q2 that impacted the G&A, and then the $900,000 on a bad debt reserve that we had to take on an account that aged out on us is really what caused the G&A to go up. Other than that, G&A was pretty stable compared to prior periods and in the future, we don’t expect a large growth in G&A in the short run but there will be we believe additional charges as we finish the accounting review that we’ve estimated at $1.2 million to about $1.5 million in Q3. Matt Hoffman - Cowen & Company: Okay, last question -- inventory in the channel, Peter, I think you indicated some seasonal softness out there right now. Your inventory is up just a bit. Are you worried about Huawei product or somebody else out there in the channel with too much just maybe slowing things down in Europe? Thanks.

Well, channel inventory we still see as, like the operators are very good at doing, as sell-in matching sell-through. So the channel inventory is something that we certainly watch but I wouldn’t put that in a category of concern. Our inventory levels, what they really are, Matt, is we -- they are related to the launch in the first quarter of Nova Speed, so we had a build-up in inventory in anticipation of that launch, which is reflected in the June 30th inventory number. I don’t have the exact number. We can get it to you after the call but certainly a sizable portion of that has already been shipped in the first month of this quarter. Matt Hoffman - Cowen & Company: Great. Thank you, guys.

Thank you. Our next question comes from the line of Samuel Wilson from JMP Securities. Please go ahead.

Good afternoon. So first question -- on Q1, if you take the revenue numbers back out, what would non-GAAP EPS have been for Q1? What’s the new non-GAAP EPS for Q1?

If we had not moved the numbers out?

No, post moving the numbers out -- after you move the numbers out, what’s the new EPS for the first quarter?

We are not reporting on Q1 at this time. We really want to wait for the accounting review to be completed, Sam. Once we are convinced that there are no further issues in Q1 -- but so far, no large changes. But again, we would really like for us to complete the review and put out Q on file so we can give you good, solid numbers for Q1.

Okay. Secondly on the embedded business, if you just look out one year, two years on the laptop OEM business, on the laptop computer business, should we start to think about modeling this down to zero over time?

Well, Sam I think that -- well, in terms of a Novatel perspective no, I don’t think that would be a good thing to do. I think that what you will see, however -- this is Brad talking, by the way -- is that our revenue may become less dependent on hardware and more dependent on value-added services and solutions and software that would fit on top of that. We see that particular portion of the OEM business morphing more into -- I don’t want to classify it as services. It’s more of a combination of value-added services and software and some opportunistic hardware plays. But certainly the way this is going -- when we get to LTE and we have a very stable long-term platform for the laptop manufacturers, we should expect to see a de facto standard for modules which will go across all the platforms. And at that point, certainly our position has been that we are going to be playing in that market but probably not in the way we are playing in it today. So you could model our existing module sales the way they are today probably down to zero by the time LTE comes out, as it applies to laptops. But again, that a small portion of the overall OEM business as well.

Right. I just want to make sure that we get on the right wavelength here.

Absolutely -- it is the right way of thinking about specifically on laptops.

Yes, specifically just on laptops -- and then lastly, just some more comments on the international business. You talked a fair amount about domestic U.S. business and your new slot at Verizon and those things. You’ve had some growth in your international business over the last year. If you could just give us sort of a color update -- any single region that did better or worse than expected, et cetera?

Sure, Sam. We have very strong positions still at Telefónica. That would be our leading vendor or carrier in Europe, and certainly strong sales in certain Vodafone op-cos. We are seeing a very competitive environment where the product lifecycle is having a lot of impact. In fact, one of the big impacts to us is the product lifecycles changes that we are going through right now. Certainly with the competitive pressures from the likes of [VP] and Huawei, it has created more of an opportunistic type of environment where we have to play with value-added and high-end solutions as opposed to going after mass market solutions. We are also seeing some opportunities develop in the developing countries, the eastern block countries; however, I would say that we are approaching those with a bit of caution as the networks are not fully deployed yet and these can be more long-term business development type operations than they are true sales opportunities at this point. But in general, we are seeing strong demand across the board in the traditional countries of Europe -- Spain, Germany, Italy, U.K. markets are doing very well and we are selling as a differentiated solution, not trying to go head to head with the major Asian competitors over there.

And my last question, specifically on your guidance for the third quarter, is there some sense here that you see, at least based on your discussions with carriers, that the U.S. consumer, U.S. back-to-school is more subdued than in the past? That just the credit crisis or whatever, the macroeconomic conditions are such that people are less willing to buy these products?

I guess I would [categories in terms of] we have seen more caution by the operators.

Perfect -- thank you so much.

Our next question comes from the line of Kevin Dede from Morgan Joseph. Kevin Dede - Morgan Joseph & Company: Peter, if you had to take a shot of the 80 to 85 expected in September, could you give us an idea on what the mix might look like?

Product mix among form factors? Kevin Dede - Morgan Joseph & Company: Well, yeah -- I mean, as you usually describe it, right? Between embedded and cards --

Sure. I would expect it probably -- in Q3, I would probably expect it to be somewhat similar to Q2, maybe a little bit more USB. I’m actually trying to see if we can get something closer to that for you but it looks like by technology, that it would be a bit more EVDO. What I am looking at in technology is 70% EVDO and about 30% HSPA. And then in terms of form factor, I would anticipate the form factor to be pretty much the same -- a little bit more USB, a relatively constant embedded, and then PC and express cards to being going down to the extent that they are supplanted by USB devices. Kevin Dede - Morgan Joseph & Company: So the inventory write was on the PC express card side, or the PCM CIA?

The inventory was the express --

HSPA.

HSPA express. Kevin Dede - Morgan Joseph & Company: Okay.

So what’s really happening is the express is being supplanted by USB at a fairly rapid pace. Kevin Dede - Morgan Joseph & Company: Okay. Then, I am still little confused on what’s restraining your new product introduction. I mean, understand it’s not on your side but I guess, and you are doing everything you can to get them out, but I’m not sure exactly what’s entailed -- is it a regulatory review or a carrier review?

Let me try to add a little bit of color to what Peter already said, because there’s multiple issues here. It’s not one product. We have several products that we are trying to get out at the end of Q3 and into Q4, so there are -- as Peter alluded to, there are certain parts of the cycle which cannot be shortened. So when you go into, for example -- I’m not saying that this is the exact issue, but SEC approval can take eight to 14 weeks and there’s not a lot of stuff that you can do to move that. And that’s tied to certain events having to happen ahead of that. So when you get into some of these things and the schedule starts to move to the right a little bit, you get into these fixed areas that we really don’t have any control over. So that’s kind of what we’re alluding to there. We’ve also had a couple of customers that have slightly delayed the launch of their platforms as well, so it’s a mix of things that are happening here. But most of them have to do with regulatory and certification issues that -- for example, the Verizon certification cycle is a fixed amount of time. There’s not much you can do to change the amount of time it takes to get through that. So once you get into it, you have a fairly -- with a -- usually within a few days, you have a reasonable expectation of when you are going to be able to ship and so as some other things move to the right and you enter these periods of time, it becomes something you can’t affect is really what we’re alluding to here. Kevin Dede - Morgan Joseph & Company: Okay, and is the plan still to address specific carriers with products that meet their needs specifically?

Absolutely. Kevin Dede - Morgan Joseph & Company: Okay, so it’s not really what’s being asked for?

No, we’ll have specific products for Sprint, specific products for Verizon, specific products for Telefónica, Vodafone --

In fact, our next generation products are probably the highest branding content that we’ve ever done before. Kevin Dede - Morgan Joseph & Company: Okay, and do you think that will be enough to put your gross margin closer to historical ranges versus what you’re expecting in the third quarter, and what you expect in the second quarter too?

We are certainly not satisfied in any way, shape, or form with gross margins in the third quarter. Moving forward -- I guess I would say this; the more differentiated, the more branded our products, the more optimistic we are about gross margin improvement. I think in our prepared remarks, what we tried to convey was that those are the products that we’re launching in Q4 and in subsequent quarters are higher technology-based products, higher branded products, and more differentiated products and that always makes us more enthusiastic that we can move towards our long-term business model on the gross margin side. Kevin Dede - Morgan Joseph & Company: Can you talk a little bit about the pricing environment on USB?

The pricing environment on USB, USB itself is competitive. The ASPs on USB are competitive but they have always been competitive. We are having an exaggerated impact, which is impacting gross margins, because of the stage of the lifecycle. So if you do a trajectory, the ASPs fall off at the end of a lifecycle as you migrate into next generation. The cost, however, typically on USB is lower. Our products have already been fully cost reduced the more legacy they are, so that gets us on the COGS side as well, which we believe is a quarterly fluctuation in the third quarter. But even our next generation USB products, we believe will have gross margin improvement because they will have lower product costs associated with them than our current USB products. So the gross margin improvement, despite ASP, will come from the associated product cost advantage we believe we will have. Kevin Dede - Morgan Joseph & Company: Can you relate that, the pricing dynamic to maybe just sort of an abstract measure of units in the first quarter versus the second quarter?

I’m not sure I could do that in real-time right now but if you give us a chance, I think we can get back to you on that.

Yeah, we could do that and I think what you would see, Kevin, is if you looked at ASP reduction, which is really what you are trying to get to, I think that we are still seeing a fairly predictable quarter over quarter ASP cost reduction. But I think what you are seeing here is that we’ve gotten to the end of our ability to reduce the product costs. So if you look at something like the 727 product, which has been in the market now for about 14 or 15 months, we have gotten to about as far as we can get in terms of product cost out of manufacturing, so it’s important that we move to the next generation chipsets and new designs so that we can go back to doing really, really strong cost reductions quarter over quarter to maintain the sort of ASP reduction that we need to be able to get back up into the gross margins that we all like much better than where we are at right now. I don’t think we have the number in front of us right now but it wouldn’t be real shocking. I think what you are really seeing is that the product cost has not changed much in the last couple of quarters. ASP continues to come down at a fairly predictable rate but we’re at the end of the product lifecycle in terms of being able to reduce the overall bought cost of the product is what’s happening. Kevin Dede - Morgan Joseph & Company: Okay, last question for me -- can you relate that ASP decline to the technology cycle? I mean, if we have to wait until the introduction of LTE before you see a change in complete product makeover, then should we expect to continue to see this type of erosion?

We don’t believe so. We believe that it will -- within the technology, there are efficiencies in the products and optimization of the product, even within the same standards before you get to next generation standard. Kevin Dede - Morgan Joseph & Company: Okay. All right, gentlemen, thanks very much.

Thank you. Our next question comes from the line of Anthony Stoss from Craig-Hallum Capital.

A comment about, you know, in the past, you’ve said your target gross margins are in a range of 28% to 30%. Have we down-shifted? Is there a new range or can you give us a sense of what that might be on a go-forward basis? And I’ve got a couple of follow-ups.

No, we have not changed our target. We believe this is a bit of an aberration caused by, like we said, product lifecycle issues. But we have not changed our -- and we think with our product mix, that we certainly can have that target going forward as our product mix changes to next generation products.

You mentioned that one of your current customers is deploying Nova Speed -- can you give us a sense of how many more might be deploying, how many different customers might be deploying by the end of this year?

By the end of this year, we have pretty much an exclusive arrangement with this particular customer through the end of the year and then starting at the very beginning of ’09, we expect this to be deployed in a non-exclusive arrangement with several carriers, both in Europe and in North America. Right now, it’s being deployed with a North American carrier exclusively through the end of the year.

Peter, or Brad, I guess -- could you guys talk about if you think you are losing share, if there is kind of share shift? If so, with what accounts?

It is difficult to talk about individual accounts. I think in some places, we’re in the lead. We have to take that lead into other operators with next generation products, so there is an ebb and flow to it. Tony, I would hesitate to talk about individual accounts on that but suffice it to say, in some we are in the lead; in others, they are certainly key customers that, if we are not in the lead, we expect to work to get to the lead position again.

Also, Peter, can you talk about what kind of controls you are putting in place on the accounting side? Are we beefing up staff or are we understaffed? Help us understand why we are so off-kilt on Q1 and Q2, and what kind of assurances investors might have for Q3, Q4 or whenever, that something is not going to pop-up again?

Sure. Like we said, these involve principally revenue cut-off procedures relating to the timing of revenue. We have not seen any significant issue about the validity of any revenue. So because they involve revenue cut-off procedures, we are putting in place controls at the end of the quarter to make sure that the items related to deliveries at the end of the quarter [inaudible]. They get fairly technical, Tony, in terms of what the actual controls will be but suffice it to say that there has not been any control that has been recommended by any outside advisor that we do not intend to implement, if we haven’t already, in the next several months.

We can’t really talk about the results of the review yet and what remediations there may be but there will be a full report at the conclusion of the review and we will be glad to share that with you then.

Peter, could you comment about -- if you had a [inaudible] in 2009 in terms of mix, what percentage of your overall revenue do you think embedded might be as a whole for 2009 -- just a ballpark?

2009 embedded?

If we’re running 30% now, what is the overall blend for ’09?

If you factor in the Gobi impact with an offset of additional vertical markets in the embedded space, together with the offset of mobile internet devices, I would probably put it somewhere at 25% to 30% for ‘09.

And then a couple of housekeeping questions, last two -- what was the headcount at the end of June?

It’s low 300s, Tony -- about 320.

And then Peter, you completed your share buy-back. I’m just wondering -- do you have any thoughts on reloading that? Or if you can give us the number of shares you bought back in the quarter?

The board would certainly consider that. I believe they would do it once we get through this entire process, considerate with financials on file. In terms of the number of shares that were bought back, I think the way to back into that is to give you the number of shares outstanding now.

It’s about 2.5 million, approximately.

Approximately 2.5, Tony.

Okay. Thank you.

Thank you. We have time for one final question -- it comes from the line of John Bright from Avondale Partners.

Peter, on the embedded question versus the new products, what do you think that transition, Peter, is going to look like? Are we going to see a trough on embedded maybe in the first quarter as the new products start ramping in the first quarter? How should we think about that as it relates to your 25% to 30% answer to the previous question?

I think what you will see is you will see -- you will see a couple of things happening, John. Part of it on the embedded is already happening on some platforms, and then other platforms where there is more of a focus on differentiation and customization, those are the ones that have the most prolonged life. So as Brad suggested before, those platforms where the ease of integration and the ability to be on multiple networks, albeit perhaps at a higher product cost, are important to a laptop environment, those are the ones that are taking place first. But as you can see, there are offsetting elements to those, both in a short-term and there’s we believe offsetting elements as we enter into the embedded through mobile content delivery devices, as well as the embedded through systems integrators and outside of the high-volume laptop PC OEMs. So there is an active dynamic between the two of those, between all of those. Go ahead, Brad.

Just one thing I want to add to that -- it’s not a black-and-white cut-off, so just realize that for example, with Dell, we will be supporting certain platforms throughout 2009 that they have elected not to upgrade to differentiated chipsets, and the same as some others. So there’s not a -- it’s not a cut-off where one day you are shipping and then next day you are not. What you will see is more of a gradual morphing from one module to another. So we’ve kind of built this into our strategy to go out and find replacement customers and continue to grow the OEM business. So we don’t see a steep drop-off and then slow incline back up. We really just see a change in the mixture between customers like Dell and Toshiba and customers like Autonet and our retail customers and others. And I wouldn’t downplay that we see significant opportunities even playing within the Gobi environment as well.

How would you hope the respective gross margin profiles would look like, first as embedded and then new product categories?

Well, we are seeing -- it’s really interesting, and the customers that are lower volumes, you know, the hundreds of thousands unit type of volumes instead of the millions of units, we are seeing gross margin that are more in line with what we would typically see with more of our commercial products going to carriers, so typically in the higher 20s and low 30s. It really depends on how much support and software and value add we are going on to. Where we tend to see the most gross margin pressure is where it becomes less and less of a services business and more of just a hardware type of a platform. So it’s a mix but we do actually like the smaller customer. We certainly get more margin out of the smaller customer than we do larger customers.

So shifting then to the inventory write-down in the quarter, is this something that’s just going to be a piece of the business looking forward? Or is it going to be possible to prevent that in the future in the next product transition?

Well, we try to anticipate it as much as we can. Of course, we have to basically forecast demand to then forecast the inventory requirements that we purchase from our contract manufacturers. So I think when we get a surprise, when our -- when our customers’ forecasting is not as accurate as what we would like, we end up in an over-stock situation, I think. But what the rapid acceleration of the acceptance of the USB product as compared to the express cards, I think we all got caught by surprise how fast that form factor took over the marketplace and left us with a higher than what we had hoped or what we had planned for inventories in the express card category. Again, I think it is due to the change of the technology and the form factor in a marketplace that was very accelerated that kind of caught us by surprise. Hopefully this won’t happen again and we keep our eye on it and these things happen quickly. Our customers come to us with feedback that’s very rapid and kind of surprising sometimes.

Last question -- can you categorize the bad debt -- the [type of customer] that the bad debt represented?

What that was, we have an international distributor customer that [inaudible] over in our [inaudible] and required us to take a look at that account and reserve it out of conservatism. We are still working closely with the customer to facilitate our highest possible recovery on the account. We are still very hopeful that we preserve the account and a lot of the recovery in the AR.

Thank you.

Thank you. At this time, I would like to turn the call back over to Peter Leparulo for any closing remarks.

Thanks, Operator and again, everybody, thanks very much for being on today’s call. We very much look forward to updating you on our progress over this quarter and in the future. Operator, thanks very much.

Ladies and gentlemen, that does conclude the Novatel Wireless second quarter 2008 conference call. If you would like to listen to a replay of today’s conference, please dial 303-590-3000, or 800-405-2236, with an access code of 11118056. Once again, those numbers are 303-590-3000, or 800-405-2236, with an access code of 11118056. Thank you for your participation. You may now disconnect.