Good afternoon, welcome to the Novatel Wireless Third Quarter 2013 Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions). After today’s presentation, there will be an opportunity to ask questions. (Operator Instructions). Please note this event is being recorded. I would now like to turn the conference over to Matthew Hunt, with Blueshirt Group of Investor Relations. Please go ahead.

Thank you and good afternoon. Thank you for joining us on our third quarter 2013 earnings conference call. We will begin with a brief business overview and outlook from Chairman and CEO, Peter Leparulo, followed by a financial overview and guidance from Chief Financial Officer, Ken Leddon. We will then open the call for questions. As a reminder this conference call is being broadcast on Wednesday, November 6, 2013, over the phone and Internet to all interested parties. The information shared on this call is effective as of today’s date and will not be updated. During this call non-GAAP financial measures will be discussed. A reconciliation to the most directly comparable GAAP financial measures is included in the earnings release which is available on the Investors section of our website. An audio replay of this call will also be archived there. Please also be advised that today’s discussion will contain forward-looking statements. These forward-looking statements are not historical facts, but rather are based on company’s current expectations and beliefs. For a discussion of factors that could cause actual results to differ materially from expectations please refer to the Risk Factors described in our forms 10-K, 10-Q and other SEC filings which are available on our website. Now I would like to introduce Peter Leparulo, Chairman and Chief Executive Officer of Novatel Wireless.

Good afternoon and thank you for joining our call today. During the third quarter we grew revenue sequentially to $92.7 million and improved our bottom line, reporting an EBITDA positive quarter at $736,000. Non-GAAP gross margins in the quarter also exceeded our forecast coming in at 22.4%. I want to start this call by stating that this is not a business as usual quarter for wireless. I would like to spend the bulk of my prepared remarks explaining where we are in transforming our business and provide an update on our plan to achieve sustainable profitability and objectives that continues to be our top priority. I’d like to start by discussing the progress we are seeing in our M2M business. While revenue in M2M was down sequentially as we addressed an implementation issue with one of our customers we have largely worked through the issue progressed with other key customers in the quarter and improved M2M gross margins which were above our consolidated corporate average. As we discussed last quarter we made important progress in addressing a wide set of opportunities that were in various stages of the sales cycle. We have increasingly being shifting to direct enterprise customer engagements with our goal of achieving anchor development customers on our new products in each of our targeted verticals; commercial telematics, consumer telematics, telemetry and security. I’d like to give a detailed illustration of what we have now achieved in that regard. In our commercial telematics vertical which includes fleet management and asset tracking I am pleased to report that in addition of Fleetmatics we have now been selected by Teleges for one of our newly developed telematic solutions for their fleet management and telematics offerings. Teleges provides a software-as-a-service based platform for dynamic routing, real time work order management, commercial…

Thank you, Peter. I will begin with a financial overview of the third quarter and then we will provide our outlook for the fourth quarter of 2013. Revenue from the third quarter was up sequentially at $92.7 million and within the guidance range we provided for the quarter. To break that revenue performance down by business segment our mobile computing revenue in the quarter was $84.1 million, up from $80.8 million in the prior quarter. This concludes $75 million of MiFi revenues, $5 million of USB modems, combination cards and related products and $4.1 million from our PC OEM business. Our M2M products and solutions totaled $8.6 million, down from the prior quarter though up over 47% year-over-year. From a geographic perspective, sales in North America account for approximately 97% of total revenue. Our net operating loss for the quarter was $4.9 million and our net loss was $5.1 million or $0.15 per share, improved from a net loss of $7.9 million or $0.23 per share in the prior quarter. GAAP operating loss in the quarter includes $2.4 million in severance and restructuring charges related to the restructuring initiatives that we announced in September. From here on I will discuss our result on a non-GAAP basis. Please see our earnings release for a reconciliation of our GAAP to non-GAAP third quarter results. The non-GAAP adjustments for the quarter totaled $3.8 million and included adjustments for restructuring charges, share-based compensation expense, amortization of acquired intangible assets and certain income tax assets and liability adjustments. Non-GAAP gross margin in the third quarter was 22.1%, up from 21.1% last quarter. Non-GAAP operating expenses totaled $21.7 million down from $25.8 million in the prior quarter. This reduction was driven by continuing synergistic savings and significantly reduced legal expenses compared to the prior quarter. Looking…

Thanks very Ken. To summarize, this is an important time as we transition over to wireless. We will be taking a more targeted approach in mobile computing and aligning our development process to key trends that we are seeing in the marketplace such as staggered upgrade cycles. We are significantly lowering our breakeven point with these cost structure initiatives. Further out, we still see a number of very exciting opportunities in front of us and we have the technology expertise and relationships to address them. In M2M, we have made key customer and design wins and are growing our pipeline, setting the stage for this business to represent a larger component or revenue going forward. We are optimistic that our M2M business can meet or exceed the CAGR of our addressable verticals, of 20% or greater. And as our integrated M2M solutions increased as a percentage of M2M revenue these higher margin opportunities should improve M2M margins and in turn overall corporate markets. All of these should build on our objective of becoming a transformed or profitable Novatel Wireless. We look forward to reporting on our progress. And with that we will now be happy to take your questions.

Thank you. (Operator Instructions) Our first question is from Michael Walkley of Canaccord Genuity. Please go ahead.

Great, thanks. Hi, this is [Sidon] for Mike Walkley. Peter my first question is obviously on the revenue guidance, a little softer than expected. Just wanted to dig deeper on the MiFi business. You've talked about competition at one of the competitors, obviously strong sales in Q2 and Q3 at all three carriers. So I mean what exactly is happening out there? Is it just one quarter effect or I mean how do you see this business in 2014 versus 2013?

The way I look at this Sid and we have seen once before is we are seeing the impact of competition at one customer, exactly as you say in the mobile hotspot product category. And what this really is as the operator’s dual source which they have already done it causes market share at any individual carrier to effectively the ebb and flow as new products are introduced and promotions are put behind different products. So it ends up being somewhat unpredictable but I will tell you we have next generation design wins which we’re developing and we are introducing to the market in these same channels and our goal is to have that right size itself, just like when we ran into this in the past where we’ve had a product B introduced that is directly competing in that one significant customer channel.

Thanks, great. And then just moving onto the OpEx line, Peter or Ken, either of you, obviously great job on reducing the OpEx this quarter and then you talked about the full benefits of the restructuring hitting next quarter and correct me if I am wrong but roughly about $18 million to $19 million in OpEx for the next quarter. Is that the baseline run rate now that we should think about? What’s your estimate for the breakeven target on the top line?

Yeah I think, this is Ken speaking Sid. Yeah you are correct on that. That’s a forecasted level of OpEx next quarter, that $18 million to $19 million which is about $2.5 million to $3 million reduction from this quarter which is equivalent to the estimated annualized saving we expected from our initiatives. As far as the breakeven this stands significantly you can back into that by taking your $18 million, $19 million divided by the gross margin that we forecast for the quarter to get toward breakeven which is significantly lower than it was in prior quarters.

Great, got it. And just one last one from me and I will pass it along. Obviously strong design win momentum for your MT 3060 platform and you have talked about planning to exceed the 20% CAGR for 2014. Just want to get a cadence of this realm. Basically is it first half weighted for next year or how should we think about, I guess modeling this thing?

Within the context of that there are some external factors in terms of our customer rollouts but I guess I would frame it like this. For the pipeline opportunities, the close opportunities that I described we are in the process right now of integrating the agents of those customer service platforms into our products and we expect to begin to roll out at the very end of this quarter and the first half of next year. This revenue for the most part is typically in M2M incremental revenue and essentially added to as we go forward. And the overall majority of these are new customers and new design wins. So I would frame it like that with the caveat that some of these are new programs and have the downstream demand from our customers, that also has to pull-through. But I would look to the timing of that as I said in my prepared remarks to be during the first half of next year when we should begin to ramp.

Great, that’s all from me. Thanks guys.

Okay.

Your next question is from Bryan Prohm of Cowen & Company. Please go ahead. Bryan Prohm – Cowen & Company: Hi, good afternoon guys. Peter, calendar 4Q clearly hasn’t been business as usual for a few years running now. I mean I think in 2011 it was the [POM] business that went soft. This is the second year in a row that MiFi is going to be weak down the stretch in the year. Help me walk through the causes here again. It sounds like this is again primarily MiFi share loss of one customer.

That’s correct. Bryan Prohm – Cowen & Company: But so wouldn't the earlier ramp of some of these new products made up some, any, all the difference in the revenue mix or what kind of customer diversification, revenue diversification initiatives are underway in MiFi to maybe alleviate this problems next year. I mean how many global carriers have MiFi today?

Well we focus Bryan on North American operator. So we’re really focused on the major North American operators where the bulk of our revenue is. And as I mentioned what this really is it’s you are absolutely right this does hit you intermittently and it hits you when dual sourcing as I said where a competing products comes in and starts begin to occupy channel and dual sourcing is pretty much the rules of the road among the North American operators. With respect to your second question, it's a good question. It really is in terms of what we expect to see is the other MiFi products which are 4G LTE some of those is in the North American operators, the networks are just beginning to ramp. So we now, one of the things that we did was have developed and certified and modified all three operators just to reduce that level of customer concentration in the MiFi product category. What we have not seen at an operator where the LTE network is just ramping or rolling out for there to be an uptick that sufficient to counter the impact at one of our larger customers. But we are hopeful at as that network grows out they will be more promotional and focused on the mobile broadband product category. In terms of the product diversification we have the MiFi product to offer carriers to mitigate against this and we also just launched a new product, MiFi Home as another element of an adjacent market to the MiFi product category again to mitigate against that. And but as I said the MiFi Home is very unique product that has new use cases around it. So we don’t expect that -- we expect that to ramp incrementally but also in a more stable fashion than something like a pure MiFi product or USB device. As the use cases become more adopted and as the product goes through pricing variations if you will because it addresses the converged data and voice we would expect that to become a bigger, to contribute margins in a more significant way to the mitigation of something like this. Bryan Prohm – Cowen & Company: So in the case of the home product is that something that could be copycatted by a competitor, a lower cost competitor within a year's time and present a similar problem? I mean obviously that’s a year down the road someone asked me to talk. Or is there something unique about home that’s going to be...

Well here is the future element I believe and the vision behind the MiFi home product category. It begins really as allowing the operator as to generate ARPU from the conversions of voice and data. So on the voice side the carrier can now offer an alternative to legacy fixed-line voice service and plug that phone into this and have it become a cellular call. On the data side it expands not just into Wi-Fi access in the home but into additional devices as well like copiers and Ethernet, goes through an Ethernet port. The future however is where the barriers come up and I would frame that in two ways. It is upgradable ultimately to voice-over-LTE which is a essentially IT means of transporting voice at a very low cost to the operators. So there is a big benefit to the operator when the network is upgradable to LTE. It’s also extensible into home automation. So that’s our vision for this product category will ultimately go to. In the home automation arena what it really will be is the intersection point between data that comes from sensors around the home in a local environment probably through Z-wave for home automation applications and it will finish the hub between that data and then the service platform at the end of the M2M solution. So as this intersection what MiFi home will do, our goal for this product category is to take that data as a fix device form those sensors and manage that data, process that data and that information with policy management around it and then transport that data to the service platform either by cable operator or wireless operator and according to those rules, the rules that are built into the [policies]. So as an example if you have a panic button in the home just by way of example you would click that panic button the device would know to initiate a 911 call to, or calls the neighbor according to a pre-programmed policy on that. So our view for this is it becomes the hub for home automation between the centers in the home and the data from them and a service platform for the actual home automation services. Bryan Prohm – Cowen & Company: Okay so it sounds like it’s much more complex and much less tough cannibal for [inaudible]. So the next question on the M2M businesses is weaker sequentially how should we look at M2M ramping in ’14. You know we are going to see meaningful work year-over-year I mean, is 2014 the year that M2M really takes off not just for you guys but more broadly?

Yeah as I mentioned we did have an implementation issue with a significant customer in M2M in the quarters that we believe is largely resolved. You know I tried to give some guide post on that to frame the opportunities that we are seeing with the carrier through our map but we believe what we put in place based on customer forecast and based on where we are in our integration effort and based on the designing customer acquisitions that we have, that we will exceed the underlying growth of the market for Novatel. We believe we wanted disproportionate share of the deals the opportunities that we see out there right now. Overall for M2M we’re in what we believe is a pretty high value part of M2M. We’re not exceedingly focused on the sort of enabling M2M with embedded modules. We are much more focused on getting closer to where we believe the value is at the end user in M2M. So for us those are the benchmarks in terms of not giving guidance but what we believe that we put in place as a platform for growth. Bryan Prohm – Cowen & Company: Okay I have taken up given time so I will pass the question onto the next guy in the queue. Thanks guys .

Thank you.

(Operator Instructions) Our next question is from Cobb Sadler of Catamount Advisors. Please go ahead.

Hi guys. Thanks for taking the question. I had a more broader question on the hotspot business. You are kind of niche player, you are up against like the Pentex of the world, LG, Huawei, ZTE very-very large players. So why you should your M2W or your mobile computing business be standalone? How can you survive? This seems kind of like Harvard Business School case you know you have been a niche player in sea full of whales. Could you talk about that? And then also in the valuation the investors are worried about that business. One of your competitors just sold their competing business for 0.6 EV to sales and it looks like in the aftermarket you are probably getting about zero for our. So how do you expect the close THAT valuation gap and should you even be in the business and should you be hiring bankers to sell the business? Thanks a lot.

Sure, Cobb. I believe what you will see in North America is we -- I don't have this as a science but we have probably been a dominant player in the mobile hotspot business for some time now with leading market share. The reason for that I think is several falls and we have seen companies like VTE, Samsung and others come and we have seen several of them go. We have a portfolio around the operators, we have a history with the operators, we have a history of reliability with the operators, we have a history of getting through certification processes in a very efficient way with them. So I would take issue with the fact that is a, that we’re a niche player in the mobile hotspot station North America. In terms of the valuation gap I see what you are seeing but we believe that the market is still growing in this, we believe that there are adjacent opportunities in this, in mobile computing and in terms of 4G gateway and home automation and as they are derivative of the same channels so we look at different alternatives on this but we still are focusing what we believe is a growing market.

If I am in your shoes I am probably disappointed and frustrated just because I mean look the proxy developed our value by the carriers but the same time the valuation you get for the mobile computing business is minimal and so it’s just I mean how can, why would you not, why would you not hire a banker to explore all alternatives for that business, given that you have been at this for a while, you have been losing money I think it's like the 15th straight quarter you have lost money. So what's going to change and I guess you just guided to a very weak quarter for that business in a time when really it should, if it's going to grow it should be growing now because you have got a new vantage spread, you have got the Verizon home business. Is just, is this business ever going to grow and look I mean you are getting for it, why not explore all alternative, if you are looking out for shareholder value why have you not done that today?

I take your point Cobb.

Okay, thanks very much. Thanks guys. Look and congrats on success with the project develop. They are obviously appreciated by the carriers. Thanks a lot.

Thank you.