Good afternoon ladies and gentlemen. Thank you for standingby. Welcome to the Novatel Wireless Third-Quarter 2007 Results Conference Call.During today's presentation, all parties will be in a listen-only mode, andfollowing the presentation the conference will be open for questions (OperatorInstructions). This conference is being recorded today, Monday, November 5th of2007. I'd now like to turn the conference over to Ms. MarcyGraham, Director of Investor Relations. Please go ahead, ma'am.

Good afternoon and thank you for joining us on today'sconference call to discuss Novatel Wireless's third-quarter 2007 results. Thiscall is also being broadcast live over the Web and can be accessed in theInvestor Relations section of the Novatel Wireless website atwww.novatelwireless.com. With me on today's call are Peter Leparulo, NovatelWireless's Executive Chairman of the Board; Brad Weinert, President; KenLedden, Interim CFO; and Julie Cunningham, VP of Communications and InvestorRelations. After the market closed today, Novatel Wireless issued apress release discussing the results for its third quarter ended September30th, 2007. If you would like a copy of the release, you can access it on thecompany's website or you can call the Blueshirt Group at 415-217-7722, and theywill fax or e-mail you a copy. We would like to remind you that during the course of thisconference call, Novatel Wireless's management may make forward-lookingstatements, including financial projections, statements as to the plans andobjections of management for future operations, and statements as to thecompany's future economic performance, financial condition, or results ofoperations. These forward-looking statements are not historical facts.But rather are based on the company's current expectations and beliefs. Wordssuch as may, will, expects, intends, plans, believes, seeks, estimates,anticipates, projects, and similar words and phrases are intended to identifyforward-looking statements. The company's actual results may differ materiallyfrom those projected in these forward-looking statements. Now I would like to introduce Peter Leparulo, ExecutiveChairman of Novatel Wireless. Peter?

Thanks, Marcy. Good afternoon, everyone, and thanks forjoining us on today's conference call to discuss our third quarter 2007results. The third quarter was another exciting quarter for Novatel. Welaunched innovative, market-leading products, saw strong demand for theseproducts, and beat guidance and expectations once again. Our market continuesto grow rapidly as 3G wireless data proliferates into mainstream technology. With innovative products and strong partnerships, we arewell positioned to continue to lead this market, and our progress is evident inour third quarter results. Revenues grew by 90% year-over-year, surpassing $104million with strong results across all product lines. Key to the upside to our forecast was the introduction ofour next generation USB products, including the new U727, the most innovativeUSB modem ever introduced, with features like storage, GPS capabilities, andLinux support. Year-over-year growth was across both EV-DO and HSDPA with astrong showing in Europe as revenues increased over 30% resulting from ournewly introduced HSUPA Ovation product in that region. Non-GAAP EPS gross margins were at the high end of ourforecast, at 29.8%, and operating margins came in at 13.6% once again, aboveour long-term model. EBITDA was $17.2 million. Free cash flow was a strong$14.5 million and cash and investments increased by $11 million to $130 million. And finally, non-GAAP EPS came in at a very strong $0.31 pershare with year-to-date non-GAAP EPS of $1.02 per diluted share. Overall, thishas been a truly remarkable period for Novatel Wireless. A year and a half ago,revenues were up $40 million a quarter with a small loss as we invested in thenext generation of products. Now revenues are up more than 150% comparatively and we seeroom for further growth with expectations of a record fourth quarter based onour strongest backlog of orders ever. Our EPS expansion has also beenremarkable, as we have grown EPS much faster than…

Thank you, Peter. First, I will discuss the financialresults and then give overall operational highlights before turning toguidance. As Peter mentioned, revenues for the third quarter increased 90%year-over-year to $104.6 million. Ovation and embedded products drove theupside to our forecast, contributing almost $43 million and $25 million ofrevenue, respectively. We saw continued strong performance of our EV-DO products,which accounted for 70% of revenue. HSPDA products were also strong, growingboth sequentially and year-over-year. In the third quarter, we shipped to 13operators and nine OEMs in 36 countries. Leading customers in the quarter included Dell, Orange,Sony, Panasonic, Sprint, Telefonica, Verizon Wireless, and the Vodafone groupof operating companies. From a geographic perspective, domestic revenueaccounted for approximately 74% of total revenues and international revenue was26%. Before I begin the further discuss of the third-quarter 2007results, unless specifically noted, all comments exclude the impact ofshare-based compensation and expense under FAS 123R. Share-based compensationexpense net of taxes was approximately $1.1 million in the third quarter of2007. On a non-GAAP basis, gross margins were solid at 29.8%; atthe upper end of the range we forecast last quarter. As expected, we saw ahigher mix of embedded sales. Operating margins were strong again this quarterat 13.6% of revenue, continuing to demonstrate the strong leverage in ourmodel. Operating expenses decreased in both dollar terms and as apercentage of revenue to 16.2% of revenue. This represented a significantdecline from 17.7% of revenue in the second quarter as we closely controlledexpenses. During the quarter, R&D expenses were $9.1 million as we continueto invest strongly in R&D. But R&D decreased as a percentage ofrevenues to 8.7%. Sales and marketing expenses were down approximately$400,000 from the immediately preceding quarter and represented 4.3% ofrevenues. G&A expenses increased modestly this quarter and represented 3.2%of revenues compared to 3.1% in the prior quarter. Including the share-based compensation…

Thank you sir, we will not begin the question-and-answersession (Operator Instructions). Our first question comes from the line ofGeorge Iwanyc with CIBC World Markets. Please go ahead.

Congratulations on the results, guys. Brad, when you look atthe tightness you are seeing in your supply chain, how long of a period of timedo expect and how likely do you think that could be resolved in the quarter?

Thanks George for the comments and certainly we are watchingthat on a regular basis. We think that the component tightness is with usthrough the quarter and probably into Q1. We think that by the end of Q1, this is past us; obviouslywe are working very closely with our suppliers to give us upside and to bringthat in. But right now, we are constrained in the quarter and we gave guidancebased on that. And we do see some lightening up in Q1, but we still willprobably be a little bit of residual, and then coming out of Q1, we should bein good shape again.

Are you seeing tightness on several different products or isit one main area?

It's one main area. It's mostly impacting our HSPA productsat this point on the longer term. There's always, within a quarter, othersupply chain components, but the one that we are mostly looking at right now ison the HSPA products.

Okay, and just following up on that. How much of a ramp doyou anticipate in Europe with the HSPA products in fourth quarter?

Well, we are, as we've said briefly on the call, we had asignificant increase in the quarter and we're looking for that to continue toramp in Q4. We only began to launch at the end of September with most of themajor carriers. And going into Q4, we are launching with additionalcarriers. So we expect additional incremental business in the quarter even withthe supply constraints.

Thanks.

Thank you. Our next question comes from the line of HasanImam with Thomas Weisel Partners. Please go ahead.

Thank you and congrats on a healthy quarter and guidance. Ihave a couple of questions on the quarter. First, on the gross margins, was theprimary decline was expected, but was the primary decline due to product mixtoward an embedded or did HSPA also play a role? And then, did componentshortages play any role?

Hasan Hi, it's Brad. Good question. Obviously, I think allthree came into effect although the supply shortages are more of an impact inQ4 than they were in Q3. So speaking about Q3, it was really a factor ofproduct mix. Embedded was very heavy and we also had the launch of HSPAat the end of the quarter, which did contribute to that. Obviously, our HSPAproducts are a little bit lower margin than our EV-DO products. But it was really the heavy mix of embedded that had themost impact within Q3.

Okay. And then you had better than expected OpEx. Was therea decline in absolute OpEx primarily due to -- I'm just wondering what it wasdue to. Was it due to lower certification costs or something else?

That and in addition, just overall improvements inefficiencies. So, we've been working and will continue to work quarter overquarter to improve the operational efficiencies of the Company. We've moved some of our operational developments toShanghai, China. And we're starting to realize some of the cost benefits fromthat, and we're going to continue to operate the Company in a very efficientmanner. I think it has a lot to do with efficiencies more than anything at thispoint.

So, we might continue to see kind of this type of costcontrol even as revenues ramp?

Yes, I think, Hasan, the only thing I would preface that withis saying that we are going to be investing in R&D on a continuing basis. Idon't see large increases in R&D, but at the same time, we think that wewill have slight increases period-over-period as we ramp to the next generationtechnologies. But in terms of the operational efficiencies and CapEx andthose measures, we have very tight controls in place and we're going tocontinue to operate and improve the bottom line as much as we can.

Okay. And then, one last question on the competitive front.On the Gobi platform out of QUALCOMM, can you handicap the risks, especiallyinterested in the certification software? Wouldn't that make it easier for, forexample, a Huawei to come into the embedded market? And Peter, you've talked about these value-added servicesthat Novatel is working on with the laptop OEMs. Is that going to offset someof the or rather create stickiness with the laptop OEMs?

Sure. Why don't we start with the Gobi in terms of what itdoes? It does simplify the process somewhat, so it does lower the bar somewhatmodestly, Hasan. I think at least based on the responses that we've seen fromour OEM customers, the responses have been varied. Some of them like that level of simplicity and the abilityto launch on mobile multiple platforms. Others have more targeted launches andthe universal application of that technology on a worldwide basis is not ascritical to them. Where does Novatel fit into that, I think was somewhat suggestedby your question. It really is in the service value adds. Those will stillexist, even the ones that historically have been one of our value propositions,the integration support, the carrier, the regulatory certification. All ofthose still stand with the Gobi platform. Moving forward -- moving to the other side of that,separately to address the second part of your question, the software revenue,absolutely. One of Novatel's primary objectives is to look at the difference isto get to service revenue and really to provide an application serviceecosystem. Now, with respect to our current products, we look at thingsconstantly like LBS, like enhanced laptop capabilities on the software side andthe application side. At the tracking, we even look to and remote diagnostics,remote access and control security. We are looking to all of those things, under the overarchingtheme that strategically, we believe that as wireless data takes off, it willtake off and move to large-scale enterprise solutions in many industries and itwill also migrate over, transition over on a really supplementally toservice-based revenues. And that's Novatel's goal is to get to those end-to-endsolutions and build the services, revenue stream, and ecosystem around our productsand the new places where these will exist.

So would you then say this is a follow-up, would you thensay that in terms of the laptop OEMs you are embedded in -- you have -- itgives you a significant advantage and a newcomer would have a hard timebreaking in because of these value-added services?

Well, on two fronts, even with the Gobi solution, there isstill significant integration and customization that will need to be done from firmwareforward and through the certification process. But more importantly, what you highlighted I think isabsolutely true. The goal of entering into that space was to create stickinesswith customers with some of these 3G applications. And that's our goal. Andgetting to end-to-end solutions in this space will rely on widespread adoptionof wireless access, WAN access in mobile computing platforms. So even with the Gobi, we will be one step ahead of that interms of the value proposition that we bring to those channels.

Great. Thank you.

Thank you. Our next question comes from the line of AnthonyStoss with Craig-Hallum. Please go ahead.

Hi, guys. Great job. Let me begin with a housekeeping. Brad,if you wouldn't mind giving us a breakout of stock comp by category?

Give us a second. This is Peter. Try to give us a second sothat we could dig that up.

Okay. Let me follow-up with another question while you arepulling that up. Your component shortages, I would presume, or could youconfirm that that's industry-wide, that's not specific just to Novatel?

Yes. Tony, that is definitely industry-wide. It is themainstream components that are used not only in data products, but voiceproducts as well. It's specific to the cellular industry, but it's a worldwidecomponent shortage.

Got you.

Okay. In terms of the top, R&D was 574. Sales andmarketing 398, G&A 494. And I'm sorry…

Cost of goods sold?

135.

Okay. Could you give us a sense; you said your guidance alsoreflects a shortage. Can you help us understand what percent of your guidanceyou are currently booked to if not for component shortages, even in just arange of percentage, what was demand dictated during the quarter? Where couldyou have pushed the number to?

That's still moving parts, Tony. We guide you to what wehave visibility to in terms of supply chain for the quarter. Anything abovethat is going to have to be addressed as we go. It's a moving target. So, I'mnot giving specific numbers at this time on that.

Okay. Pricing environment, can you update us on where westand being exchanged or not?

Pricing has been very relatively stable. It's actually beenvery good because of new product introductions. Obviously, we get to leveragethose new product introductions as they come to market and it keeps our ASPsstable for several quarters. On the embedded side, it's a very competitive business. Itremains so. The nice thing on embedded though is that it's pretty muchstructured in a contractual manner. So, we have quarter-over-quarter costreductions and we have great visibility over a three to four-quarter period oftime. So, we are seeing stability. Average, as expected, ASP costsor price reductions across legacy products have a strong ability to maintainASP’s on new products.

Okay. Two last quickie questions. Any currency impact in thequarter?

Certainly, a little bit, but we do -- however, we do managecurrency through hedging. So we did have a little bit of an impact on thestrong Euro, but that's mitigated a bit by our hedging strategy as well.

Lastly. Today, I think you are in three different Vodafoneterritories with your HSUPA product. Can you discuss plans to go after andtarget more Vodafone areas?

Sure. Historically, we've been at, at least six or seven. I thinkthat in the quarter you will start there's Vodafone Germany, Vodafone France,Vodafone Spain, Vodafone U.K., Vodacom, Vodafone Austria, and probably oneother one that I'm Portugal is the other one. So those are all either launched or launching and we'rethose interested in additional Vodafone of those as well.

Great. Good job, guys. Thanks a lot.

Thank you, Tony.

Our next question comes from Matthew Hoffman with Cowen and Company.Please go ahead.

Good afternoon and again, nice job, guys. I have a questionon the component supply tightness. Don't want to beat a dead horse here. Butwe've seen this all over the space and you've identified it more on the HSPAside. But exactly which component is it that we're talking aboutthat's short? And second, what are your suppliers telling you? Is it demand orcustomer upsides to orders or production shortfalls that are causing thesupply?

Sure, that. Three answers there. Number one is that just topredicate it's specific to HSPA on our product line because it's designed onlythrough HSPA products. But it could be applicable to a CDMA product as well. It's real sensitive right now. I'm actually still trying toget additional parts and stay in good favor with my suppliers. So we reallydon't want to comment specifically on it. It's an integral part of the RF chainand it's used by everybody. It's a very commonly used component and it certainly is anindustry-wide phenomenon. We're seeing it not only with our competitors, butalso in the cellular industry as well with some of the larger cell phonecompanies that are looking for parts and calling around. So we know that it's asignificant thing. In terms of the issue, we believe it's two-sided. One, webelieve there were initial production issues with the supplier; and number two,the increased demand has put further pressure on them to deliver supply. We have actually got fairly detailed delivery schedules andrecovery plans that have improved dramatically over the last few weeks. So, weknow there's a lot of work being put on it, but there's no, in the fabbusiness, there's no quick turnarounds to these solutions. It's just a matterof catching up, but certainly increased demand did play a factor there.

All right. Probably another housekeeper for you, Brad. Wegot the embedded $25 million. Could you give us the rest of the top-linebreakouts and then also split it by technology? I know we got the HSPA at 30,but did you have any UMTS on top of that and what was the amount?

Yes, I think for the first time we had almost nil on UMTS. Ithink it was all HSDPA and HSUPA. Let me just take a quick look here at thenumbers here I know Ovation, we are at 41%. Embedded was 24%, and PC Cards, ourcore were 34.7%. For the quarter, obviously, it was 74, 26 in terms of NorthAmerica versus rest of world. And what did I miss? I think that should coverthe mixes.

Our technologies

And by technology, we were 70% EV-DO and 30% HSPA.

Great. I will let somebody else jump in there. Thanks, guys.

Thanks.

Thank you. Our next question comes from the line of JohnBright with Avondale Partners. Please go ahead.

Hi, good afternoon. This is Tom Kucera for John. Bright. Firstquestion was on if you have the a DNA number for the quarter.

We would like to a get that clear is (inaudible) is well.

Okay. Next question in terms of the domestic, internationalbreakdown, I guess listening to your comments last quarter, I took you to meanthat international HSPA sales to Europe would be a larger portion of revenueswhen in fact it looks like it just shifted a couple of percentage points. So I'm wondering if this is really kind of what you expectedfrom Europe this quarter or maybe we're seeing some of the impact from thesupply shortage you're talking about or maybe if there is something else goingon in…

I think in Q3, it was a factor of being able to launch andget through certification cycles. Certainly, we would have loved to ship morein Q3, but we think it was significant statements; we had a significantincrease I still think over Q2 from Q3 with our European revenues. Obviously, launch cycles are what they are. We were veryheavily loaded in September with shipments, and we are pleased and we'relooking, we're very happy with the outlook going forward. But there could havebeen, I'm not sure what else there is to that question other than we arelooking forward to additional revenues in Q4. It's about $3 million on on the…

On R&DA, and one last question. In terms of possiblerevenue diversification acquisitions, wondering first how high of a priorityyou regard revenue diversification. And second, how will you look at paying forthose acquisitions?

Sure. We regard revenue diversification as a very highpriority. And really in the last four to five months, have organized with muchmore order around looking at different external growth opportunities. As I said, these are both in our core markets and in relatedmarkets. How we expect to pay for them, I think you will see that we've got avery strong balance sheet. Certainly to strong enough on the cash side so thatwe have discretionary funds on that, which is the principal place that we wouldfirst and foremost look to. But it's very difficult to talk about that outsidethe context of a particular acquisition.

All right. Thank you and congratulations on the quarter.

Thank you.

Thank you. And our next question comes from the line ofKevin Dede, Morgan Joseph. Please go ahead.

Let me add my congrats, guys. Nice job. Brad, would you mindgiving us just a little more detail on the embedded market. And I understandthat some shipments pushed out. But you'd think in light of the holiday sellingseason that things might ramp up there? Could you go through that?

Yes, absolutely, Kevin. Certainly. First, we had very strong-- to reiterate, we had very strong sales in Q3 for embedded. It was about 24%of our business. There was one our large customers that had some platformissues at the end of Q2 and they had to delay shipments as they were not ableto manufacture and ship platforms. That business moved into Q3. That started toload up the quarter a little bit in terms of revenue. And then also, we had Dell and specific to your question,Dell and Sony launched major new platforms. I forget the exact number, but itwas over 10 and that stimulates additional business as well as they're startingto stop stock and get ready for the seasonality. We think that in Q4 it is flat to down slightly basicallybecause of the incremental business that we had in Q3 that wasn't expected. Sowe're not trying to downplay it as much as we are trying to level set on thebusiness going into Q4 on the embedded. Certainly, seasonality had something to do with it althoughmost of the platforms that we are still shipping are more geared towardsenterprise. That Dell Latitudes and the Insperons and the Sony, the VAIOs thatwe're embedded in all really more geared towards enterprise than they are theconsumer at this point. So, while we do see some potential for incremental business,we think that it's going to be fairly flat in Q4.

Does that radio chain critical component impact your modulebusiness?

It impacts us across the board. Yes, it does. It impactsanything that has and HSPA radio in it. So, we are in allocation just as oursuppliers are in allocation. And again, the guidance was based on thatallocation element being factored in. So when we are talking about overall, we're looking at allof our products being impacted that are on the HSPA side.

Could you hazard a guess on how you see the domestic marketgrowing in Q4 versus the European market vis-à-vis the EV-DO to HSPA ratio inthe mix?

The good news, Kevin, is that there are substantialmarketing programs underway. Probably the fact that I just was looking atU.S.A. Today, with a lot of yonders the Sprint ad in the top upper right handcorner of the money section featuring our product. And we anticipate a lot ofadvertising and promotions from Verizon as well. That being said, EMEA is extremely active with our MC950Dproduct. Obviously I have a little bit of constraint regarding supply chain,but the good news on this, we don't want to downplay the supply chain issue.But this is not something that has cut off the spigot completely. It's justgoverned how much we can ship in the quarter. So, we're filling a lot of demand. I think that Q4 has got alot of potential in terms of our carriers, but I will also tell you that we arealready seeing some of that demand in the quarter, especially with the USBproducts at both Sprint and Verizon. They're very strong and we anticipate thatcontinuing for the rest of the month, the rest of the quarter.

Last question from me. Is there a pricing implication to theshortage? And are you going to have to -- are you reflecting that in yourmargin guidance?

Yes, that is part of the margin guidance. That's why we areslightly down on margins in Q4 is because we are anticipating and have actuallyalready experienced some expedite fees as well as our going out and looking forparts in the markets that we normally -- in the after sale market we've beenlooking for components where we can get them and we are being as creative as wecan to get additional components. So there is some impact there. It's not a major impact, butit does have some impact on the margins. The other part is just the product mix in general. We wereanticipating shipping more EMEA in embedded, which are going to continue tohave a slight impact on margins going forward.

Very good. Congrats on a nice job, gentlemen.

Thank you Kevin.

Thank you. Our next question comes from the line of MikeBurton, ThinkEquity Partners. Please go ahead.

Hey, congratulations, guys. Could do most questions havebeen asked. Can you just actually talk a little bit about the ramp of Ovationand HSDPA and when does that pay that 10% of revenue mark?

Sure. I think that a majority of our revenue in the comingquarters is going to be on the Ovation MC950D. We're still seeing a strongdemand for ExpressCards in Europe as well, but we're starting to see the samephenomena that we did in North America, where we anticipate over the next twoquarters, the Ovation products becoming the majority of sales going into thosemarkets. So if we look at HSPA as being 30% of our business Q3 andgoing into Q4, realistically you can say that being coming true within the nextquarter or two. Just without sitting down and doing the math. That's where themajor growth area is in EMEA for us right now is in the Ovation product line,very strong demand and interest. And then also, just a note, it's with some of the customersthat we haven't done business with for a while. Like for example T-Mobile isone of the customers we're launching with. And we've shipped through thirdparties, but we haven't had a direct relationship with T-Mobile for a fewquarters. And so we have incremental business and incremental carriersas well so it's traditional carriers with Telefonica and Vodafone and others.

Okay. And what percent of the Ovation sales was it this lastquarter?

Ovation sales worldwide, we accounted for 41% of revenue. Itwas about $43 million in sales. And I think if you European Ovation was about alittle bit over 5% of revenue in Q3. And we expect going forward, to be rampingwith additional carriers through Q4, which will hopefully move that number up.

Great thanks.

(Operator Instructions) Our next question comes from theline of Mike Walkley, with Piper Jaffray. Please go ahead.

Hi, Thank you. Congrats also on the quarter just had aclarification question for you on your embedded module. When you talked aboutyou would exceed $500 million revenue next year even with embedded module flat,would that be flat on a year over year or kind of from the run rate you are onat this quarter? Just trying to get a sense of how you see that businessprogressing next year.

I think flat from the period that we're at right now. Ithink that the thing to be considerate of here too is that the overall balloonis expanding across all the product lines. So, we're looking really as it flaton a percentage basis and going forward. That would be the best way to think ofit.

Okay, great. I just wanted to clarify that point. And justone other question to follow-up you talked about, you saw WiMAX's opportunity.I was wondering if you could discuss when you might be entering the WiMAXmarket with products.

Sure, absolutely our WiMAX our stretch for WiMAX is stillthe same. Sprint is our identified and targeted partner and how Sprint goes, wewill go. Now obviously that is a bit of an equation without all of the piecesat this point. But our plan is still to deliver a combination EV-DO WiMAXproduct into the market second half of '08, in conjunction with the carrierthat we just named. And that strategy hasn't changed. We're down the road withthat and we are just at a point now where we need to see what the clarifiedstrategy is with Sprint going forward.

Great. Thanks. That's it for me and good luck getting thosecomponents in time.

Thank you.

Thank you.

Thank you, we have time for one more question and our nextquestion comes from the line Samuel Wilson, with JMP Securities. Please goahead.

Three very small housekeeping questions and then one alittle bit more serious question. Head count, cash flow from operations andCapEx for the quarter?

Okay, so head count is just north of 300 and for CapEx was$2.7 million.

And cash from operations?

And cash from operations was…

18.1?

18.2?

I'm sorry. Hold on a second. Wrong number. 2.2.

2.2, I'm sorry -- free cash flow is 14.4, right? So, 14.5,so 18.2. And then the…

that’s why we discuss we're just going to verify this realquickly, okay?

Sure, and then little bit more serious question. This is forPeter. Have you seen any change in the competitive environment vis-à-vis Asiancompetition in the last 90 days? For current competition and expectedcompetition in the future?

Sure. And you're talking about Asian suppliers coming intoour market?

Yes. I mean the commentary frequently is, oh my God, on thehorizon, Huawei, Pantex, fill in the blank, going to come in, dive bomb pricingand this market is going to end like a bad hurricane.

Sure. That's a very strong statement so I'm going to feelcompelled to give somewhat of a…

I'm just wondering, has there been any change.

Indulge me with a little bit of a longer answer. We have notseen the market dynamics change. The low-cost products in this space have beenhere for a while now and we’ve competed against them and, in fact, competeagainst them every day. As you look at some of the vendors the operators havemultiple vendors on many, many product lines. Our ASPs in that environment havebeen very stable, certainly on almost all products as a group. So, we have notseen the market dynamics change in terms of the competitive environment on thatspace. Overall, we will I would not frame it in terms of the strongstatements that you make about it. There have always been low-cost providers inthis market as well as frankly in handset markets as well. What we see actually is somewhat of the converse. We see letme just give you several observation points, which I believe is why we've seenso much ASP stability over the last couple of quarters, even in the face ofAsians being at the low end of the market. Number one, everybody has been taking their lead from us. Wehave been first to market with multiple novel innovative new products on many,many different form factors and then have been followed on them. Now, when we get followed on them, they are our firstgeneration ends up being in some cases their second and third generations onproducts on that. Number two, what we've found as well going forward is thatthose products tend to be in the low end of the market. What does that mean?Enterprise IT managers are testing these products now that it is moving intolarger scale enterprise adoption, almost as much as operators now are in termsof performance. In fact, in some cases, we've even come in because of returnrates in the lower end of the market and asked to cover that part of the marketspace. Number three, I think what you've heard a bit on this callis that wireless data is getting more complex, not less complex. There are manytechnologies, which are coming to the market; application interfaces aregetting more numerous; the software, the firmware, the integration is gettingmore complex overall, which is really what Novatel strengthen and its valueproposition is. Lastly, what I would add is that even among the operators,there is a level of stickiness because we have a lot of portfolio products thatwe ship into each of these operators. So, there is a complete solution that weprovide with multiple products in there. So, I don't see the market being able to, I don't see themarket responding to a one shot low-cost product on an individual product thatwill change the dynamics in a material way.

Peter, thank you very much for the straightforward answer.

Sure.

Just real quick, Bob, it's a negative $2.2 million for thequarter.

Thank you.

Thank you our final question comes from the line of LarrySolomon, with Capital Guardian. Please go ahead.

Just looking out to 2008, normally you would have a downsequential quarter in the first quarter, although this past year, obviously,you had a massive first quarter. And going into the first quarter of 2008, youare coming off of these shortages. So with all of that in mind and the strong demand and strongbacklog, do you think that the first quarter is most likely up or down from thefourth quarter?

Hi, Larry, it's Brad. I don't think we have great visibilityinto that yet. I think that though, if you look at it in terms of overalldemand, for products, they are we don't see any shortage of demand. So, will there be pent-up orders at the end of the quarter?That I can't tell at this point. So some of it is going to depend on if we haveif we get more products in and some of it is going to depend if those ordersare still there when it comes time to ship. So we are very optimistic over the long haul, but I don'tthink I've got enough visibility to guide you on whether it's going to be upover Q4 or not at this point, just that we see very strong demand, and we havevery new products going into the market and we are expanding the proliferationof those across a variety of geographic locations, so we are optimistic.

Great. Thanks a lot.

There are no further questions at this time. Management,I'll turn it back to you for any closing remarks.

Thank you very much for all of your interest and we lookforward to talking to you again in a few months.

Thanks, guys.

Ladies and gentlemen, this concludes the Novatel Wirelessthird-quarter 2007 results conference call. If you would like to listen to areplay of today's conference, please dial 1-800-405-2236 or 303-590-3000, usingthe access code of 11099869 followed by the pound key. ACT would like to thankyou for your participation. You may now disconnect.