Good afternoon, ladies and gentlemen, welcome to the Novatel Wireless fourth quarter and full fiscal year earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator instructions) Now I'd like to turn the conference over to Ms. Julie Cunningham, Vice President of Investor Relations. Please go ahead.

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 quarter and the full year 2008 and Ken Leddon, Chief Financial Officer will review the financial results. As a reminder this conference call is being broadcast on Thursday, February 26, 2009 over the phone and the internet to all interested parties. The information shared in this call is effective as of today's date and will not be updated. During this call, non-GAAP financial measures will be discussed. Reconciliations to the most recently comparable GAAP financial measures are included in our fourth quarter earnings release, which is available on the Investor Relations page of our Web site at www.novatelwireless.com. The audio replay of this call will also be archived there. Today's discussion may contain forward-looking statements. These forward-looking statements are not historical facts but rather are based on the Company's current expectations and beliefs. The Company's actual results may differ materially. Please refer to our SEC filings for a detailed discussion of potential risks. Now I would like to introduce Peter Leparulo, Chairman and Chief Executive Officer of Novatel Wireless.

Thanks to all of you for joining us today. Preliminary results for the fourth quarter of 2008 were $65.1 million of revenues, slightly above the mid-point of our guidance with net loss of $0.06 per diluted share on a non-GAAP basis and a net loss of $0.10 per diluted share on a GAAP basis. For the full year we reported revenue of $321 million. GAAP net loss of $1.2 million or $0.04 per diluted share and non-GAAP net income excluding FAS 123 our stock-based compensation expenses of 3.8 million or $0.12 per diluted share. Our results were significantly impacted by the current economic environment. We are seeing decreased customer demand along with tighter inventory control by our carrier partners. Additionally, and as expected, we are seeing our competitors to be aggressive in the marketplace especially in Europe. Market and competitive issues impacted gross margins in the quarter, but we expect them to substantially improve in the first quarter of 2009. In this environment, we are focused on controlling cost and ensuring that we maintain a very strong balance sheet. With over $143 million in cash in investments which was essentially flat from the prior quarter, we are well positioned even with the decrease in year-over-year revenues in 2008. I would like to talk about our strategic direction, the principle initiatives that we will undertake throughout 2009 and beyond and the progress that we have made with them. Our long-term strategic direction is to provide end-to-end mobile broadband solutions. This means bringing to market new devices with mobile broadband enabled applications running over the carrier network often on hostage server. As the operators' offer more content and services to broadband users, we believe we can support them by offering a variety of solutions that can scale to meet their needs and…

Thank you, Peter. Unless specifically noted, all comments about our preliminary financial results exclude the impact of share-based compensation expense under FAS 123R. Share-based compensation expense of that taxes was approximately $1.2 million in the fourth quarter of 2008 and $5.1 million for the year-ended December 31, 2008. As noted in our press release, we have not yet finalized the determination of our tax provision and certain accounting estimates. As a result we are reporting preliminary financial results and these results are subject to change when we file our audited financial statements. As Peter already covered our full year 2008 results I will provide a greater detail on the fourth quarter results. Revenues for the fourth quarter were $65.1 million, a decrease on the $118 million reported in the prior year period. Revenues by product category are as follows: USB products accounted for $45.1 million or 69% of revenue. Embedded products were $15.7 million or 24%, and PC and ExpressCards were $4.2 million or 6% of revenue. Revenues by technology, EVDO products were 59% and HSPA products were 41%. From the geographic perspective, domestic revenue accounted for approximately 77% of total revenue and international revenue was 23%. During, the fourth quarter, we shift to nine operators and 13 OEMs in 25 countries. Key customers in that quarter included Dell, Everlite, FoxConn, Panasonic, Rogers, Sony, Sprint, Telefonica and Verizon. On a non-GAAP basis, gross margins were 12.5% which was below our guidance. Q4 margins were negatively impacted by competitive pricing pressures, foreign currency fluctuation, for a year old dominated sales and higher than planned shipping and fulfillment cost. Gross margins were also significantly impacted by the following adjustments. Firstly, approximately a $3.4 million in inventory evaluation, reductions and approximately 830,000 in related asset impairments. These adjustments were driven by recent changes…

Despite significant economic headwinds, we are focused on bringing innovative new products to market that will better position us for the long-term. Four new product introductions this month, significant revenues from content delivery products and the announcement at MiFi are three clear examples of how we are making fundamental progress as a company. Our balance sheet remains solid and we are focusing on executing new products for the long-term. And now Ken and I will answer any questions. Operator, please open up for questions.

Mathew Hoffman – Cowen & Company: Hi Peter, Ken. Like to just touch your guidance for real quick just to make sure I understand looks like revenue kind of flattish quarter-on-quarter, I guess reflecting some of the new product uptake. And you are saying that gross margins will improve I guess on a non-GAAP basis but the EPS is not going up a whole lot is not improving whole lot is that because you are anticipating higher R&D and SG&A cost, here in the first quarter in preparation to the MiFi ramp?.

Hi, Mathew, thanks for the question, this is Ken speaking. With regard to the first quarter, we believe right now it’s the 65 to 70 level we can partly exceed, the Q4 in revenue. The margins you see some recovery because we do not anticipate any of the inventory and asset charges, evaluation charges we took in Q1 and we have a pretty good idea of the revenue in gross margin makes in our business at this point, so we think that then, so you see the recovery that 22% range we believe. And the SG&A is also not going to benefit from some of the Q4 adjustments that we saw in Q4 again that there was we talked about an engineering reimbursement in the R&D cost categories as well as in adjustment to compensation charges of that was about a $2 million adjustment those will not repeat. So those cost categories will return to normal levels. In addition, that we do expect some increase in R&D as we launch new products in the coming next couple quarters. So there will be some impact on the earnings per share for those changes. Mathew Hoffman – Cowen & Company: Okay. So, just to clarify the R&D should maybe pick up a little bit here in first quarter on the front side of these launches for MiFi and some of the new products?

Yes, actually, our attempt to transform the company and move the strategy away from just far we are into the services and the ecosystem were on MiFi we do expect to invest in some R&D going forward. So those costs will trend up a bit to accomplish our strategy, we believe. Mathew Hoffman – Cowen & Company: Alright, that sounds perfectly logical. So let's shift gears to you, maybe Peter get you in a little discussion, MiFi obviously a whole new product and its unclear exactly though whether you guys, how long do you anticipate Novatel having the field wide open. Do you expect any competitors come in here on the MiFi type form factor, USB had some competitors pretty fast, good space having a little bit more than exclusive type of relation and exclusive with those product as time goes on. And about how long do you expect that to last?

Sure. When we develop MiFi, Matt, we time to release a bit in such a way where we expect it to have a defensible development effort on the hardware side of it. And you can also see that the marketing around the branding of that has had some good traction among the operators. So that was the first stage of it. The second stage is to get the installed base around the connectivity portions of the device, which we believe we have done on the sales cycle and I think I mentioned in the prepared comments we'll be launching through operators throughout the remainder of the year and we've had a lot of good interest on that front. But you are right, our challenge is to take this product with the installed base that we believe it will have on it and move this product to an end-to-end solution which is where the seeking is on it. And those are the efforts that we are putting forth to the company from here going forward. So it's really a three phase process in terms of other vendors imitating the hardware. We fully anticipated that when we embarked on the three stage process. And frankly, we are flattered that they would imitate it and try to imitate it but by the time that they come out, we envision having launched with tier one operators, we envision having an installed base of users. And as you suggest our biggest challenge to look forward is to make sure that we create stickiness as soon as possible with that product line. Mathew Hoffman – Cowen & Company: Okay, so it launches here in CDMA at the end of the first quarter. Can you give us some sort of road map about the type of ramp into 2Q for MiFi and whether you expect the HSPA+ or HSUPA version of the products for 2Q?

Well, what we've announced with Telefonica is that it will launch in right around the May timeframe and that will be the first European launch. So, let me take that as the benchmark. That will launch, the operators have a lot of different plans for this product but that will launch in several different channels both consumer related channels as well as enterprise related channels, vertical markets on it, things like fleet management, transportation, medical. So those will be the first of places where we expect to get some traction. Mathew Hoffman – Cowen & Company: Great. And last one on housekeeping for Ken. Could you go over the splits again, I don’t know if I caught them all especially the, I guess we’re going to call them embedded which will include the content delivery products. Could you give us the break out in 4Q for embedded versus USB?

Sure. Embedded products math was 24%. USB was about 70%. Mathew Hoffman – Cowen & Company: Perfect. Thanks again, guys. Appreciate it.

Okay.

Thank you, sir. And our next question comes from line of Mike Walkley with Piper Jaffray. Please go ahead. Mike Walkley – Piper Jaffray: Great. Thank you very much. Just a couple of more follow-on questions to what Matt asked on terms of MiFi, given it’s a new product to get your installed base, is it something that it’s a lower or higher gross margin product. Just how should we think about modeling that and any targets in terms of may be a run rate of revenue run rate we could expect once it rams maybe over the course of the year?

Sure. In terms of gross margin, Mike, MiFi as I think most versions of MiFi have lot greater IP content in connection with their processing capability, their GPS capability and some of the needed applications that will actually launch with. The gross margins reflect that, so the gross margins are higher than our core products and higher than our current gross margin run rate on the bulk of the versions that we're launching with MiFi right now. In terms of the actual run rate and traction, it’s a hard question to answer, Mike. Number one, because it’s a new product. We've done some market studies on it and the operators have done some marketing studies on it in terms of what price point do you get and intend to purchase in focus groups. I'll tell you it's very highly dependent certainly on the consumer side, on things like in-store subsidies, rebates and as you might imagine the rate plan can either, it can really take one of the barriers down in terms of getting traction. If you have five users on this depending on what that rate plan is for five devices, you may have very well have removed one of the larger barriers to get interaction in mobile connectivity. So the run rate is difficult, but to anticipate because it’s a new product, the operator also have a lot of different plans depending on what space they are launching this and so I think we’re probably going to have to wait until quarter after launch to really see what the attached rate is. Mike Walkley – Piper Jaffray: Okay. That’s great. That’s helpful too. Theoretically if this product ramps over the course of the year, your gross margins could trend higher from the low 20s right now?

Correct. We would expect it to be enhancing gross margins as well as on the contribution side. Mike Walkley – Piper Jaffray: Okay, great. And then just on your growing non-PC embedded module business, maybe you could help us just walk through margins there maybe on the gross margin side and then also on the operating contribution dollar side for those type of products?

I'll take a short on the non-PC embedded. The non-PC embedded is, the gross margin on that, we have several outside of the high volume laptop PCs, we have some verticals as well as content delivery. The margins on that are generally reflective of what our margin structure, where our margins are right now. On the contribution side, once development is over that goes down with fairly nominal selling expenses. Mike Walkley – Piper Jaffray: Okay, great. Thanks and then I know the macro stuff out there, can you talk a little bit more just on what you are seeing in terms of carrier inventory levels sounds like they are coming down and your overall inventory level went down. So, how do you feel about filling demand if there is any kind of uptake at certain carriers?

In terms of market, you're right. We have seen the operators do is because of the just the macro uncertainty is we’ve seen them making efforts to reduce their inventory levels. What that causes to us is rather than get large volume orders, you get a faster order and cycle, essentially just in time on a selling basis and then the question becomes how does that selling basis relate to any decline in self route, does it advance ahead of it or does it travel behind it, which is what we use and trying to keep visibility to basically determine what we have to do on the manufacturing side. I'll tell you we've put a lot of focus on this and we have advanced our supply chain as far forward as we can it with undifferentiated products so that we can do the customization required and shorter order than we have been able to do before and basically do this postponement of differentiation until the very end so that we can turn as fast as possible to the delivery based on short just in time deliveries. Mike Walkley – Piper Jaffray: Okay, great. And just follow-up on that you mentioned last quarter I believe from my notes that there is some component constraints that were impacting, have those been cleared now? And then, one last comment on the just overall North America market any change in the competitive dynamics?

The component constraints that I was talking about last quarter have been resolved by and large and we do not anticipate that there is an issue with respect to them any more. In the North American market, ASP is always present in North America as well as Europe, it's most severe in the Europe, we are seeing some competitors with the aggressive pricing. Frankly, if we do not go head-to-head with sort of ME2 products that’s the place where you can the ASP pressure. If we go with what we believe we have, which is different form factors going forward if we're, we have differentiation in those form factors and frankly if we are first to market with both platforms that are based principally on cost reduction as well as platforms based on an upgrade cycle for first to market and those we mitigate the ASP pressure. It's when you see that sort of a long life time to ME2 products that the ASP pressure begins to hit you. Mike Walkley – Piper Jaffray: Okay, great, thank you. Good to see you at Mobile World Congress last weekend and on the next pressure on the MiFi products. So, good luck developing that platform.

Thank you, sir. And our next question comes from the line of Paul Coster with JPMorgan. Please go ahead. Paul Coster – JPMorgan: Thanks very much. Ken, do have you some sense of what percentage your first quarter revenues will come from new products?

Yes, it would be over half. Paul Coster – JPMorgan: Okay. Got it. You are talking about bringing an application onto the platform and seems like a good idea. However, many of these applications presumably are outside of your domain, they are actually third-party applications, not that that's a bad thing. Is that the strategy just sort of co-ops third parties into the development of these applications?

Well, let me start with that, Paul, we really never had an opportunity on our products to do something like this, so we've never had processing capability to this extent with our new products, so the MiFi is the first platform to do that. It's I wouldn't break it down by parts, some of these applications we are doing internally and we've got the capability of doing them internally, they sit at the firmware layers so we have sort of hooks to do them internally and we've already been working on them over the last several months. We will launch those over the next couple of quarters. Some applications like the Lucent deal with the Nonstop Laptop Guardian, that came out of Bell Labs, it is a enormous effort out of Bell Labs that has gone for a couple of years with enormous functionality that does not exist in the market over there and really solves very serious IT problems that exist the more and more mobile devices get out there in terms of device management, quarantining viruses in mobile devices, waking up devices that are asleep or turned off. The real problem that was solved that go deep into the technology level. Those are the ones that we will go to market with technology partners. So we'll do both, we have native applications that we are doing internally, some are the server applications, we are doing internally as well when OCS [ph] launch those and the focus there will be going to the right channels to get to the enterprise and the end user and then some of the larger ones that take a lot of effort where we provide channels we will do that with strategic partners. Paul Coster – JPMorgan: Got it. Okay. Now, I've seen these Chedan [ph] reports, so the Kindle 2 and if you look at the FCC idea on the embedded mode it looks like it’s a Novatel modem. Can you confirm that and is it material to expectations for '09?

We can't confirm then I think we stated in our prepared statements that FoxConn is a significant customer and is a 10% customer in Q4. FoxConn is the manufacturer of Kindle 2. So we can confirm that. In terms of materiality going forward, probably you'll to indulge me on this as you might imagine in this space we are under fairly strict NDAs in terms of looking forward. But this was a contributor to have revenue in Q4 and we expect it in Q1 and that’s pretty much the end of what we are able to say in terms of what that will look like going forward. Paul Coster – JPMorgan: Appreciate the (inaudible). Thanks very much.

Sure.

Thank you, sir. And our next question comes from the line of Samuel Wilson with JMP Securities. Please go ahead. Doug Ireland – JMP Securities: Thank you. This is Doug Ireland for Sam Wilson. Good afternoon. I had just a couple of questions, one is on headcount so, it sounds like you are retrenching but you’re doing it in an aggressive way you are moving forward with new plans. All throughout the first quarter earnings calls, we've been tallying up headcount cuts, so I'm just wondering how you are addressing this sounds like you are moving up and not down.

Well our current headcount is 307 and I would say we think that the cost reductions that we put in place for the company and the OpEx discipline that we historically have had over our peers, we're satisfied with right now. You might look at we have operated in a very disciplined OpEx environment and for very long time, essentially always have. And we are very accustomed to leveraging those capabilities and still performing, so on the OpEx side in terms of headcount there are normal performance reviews, obviously, you go through special at this time of the year, but in terms of material changes in force, we are comfortable with where we are in terms of headcount. One thing you might look at in terms of operational leverage, I believe it was right around $800,000 for last quarter which is a pretty nice number for us in terms of leverage in our business model operationally. Doug Ireland – JMP Securities: Yes, that is great revenue per employee. Can you give me a little bit of color on the $1.6 million – sorry the $1.8 million adjustment to compensation, some form of reducing bonuses or something?

I can't. Ken?

It was a – I waive consideration of my bonus which was part of that and we reversed discretionary bonuses among most of the management team and the corporate component of bonuses among most employees. Doug Ireland – JMP Securities: Okay. Great, thank you.

Thank you.

Thank you, sir. (Operator instructions) Our next question comes from line of Bryan Blair [ph] with Ledge Partners [ph]. Please go ahead. Bryan Blair – Ledge Partners: Hi, thank you. In answer to Paul's question, you said that you expect new product to be over half of revenues in the first quarter. I was wondering if that means that embedded products then go from 24% to 50% and USB declines from 70% to 50% or there are other products in there that makes that not the case?

The – this is Ken speaking, Bryan. The new product classification would include our new HSP launch or USB launch for the FC760s we consider that a new product sale. And that would include also some of the vertical embedded products as well. Bryan Blair – Ledge Partners: Okay. So can you kind of give maybe an approximation on what you think that as a likely split between USB and embedded business then in Q1?

Yes, I think I can. USBs will probably about 60% of that I will expect embedded to be somewhere around 35% to 40%. Bryan Blair – Ledge Partners: Okay, great, very helpful. And then what kind of visibility do you – any visibility but can you talk a little about what you are seeing right now in the current quarter in terms of competition and how they are pricing USB for the U.S. products right now given the current environment. I know that but you had mentioned on your prepared remarks that was one of the things that had affected gross margins particularly in Europe. I was wondering if you could talk a little bit about what you are seeing right now given that we are two months into the quarter and just maybe you can speak about a little bit that'll be great?

Sure, on the USB side, it is already competitive in Europe, but I think you are right in terms of what you suggest is that we are seeing stability in the North American market, certainly in this quarter, being two thirds of the way through the quarter. We don't know whether that will change but certainly at some point if competitors get too aggressive on USB pricing especially with the new product at some point it will intersect with not getting at all rely on it. So we view it being somewhat stable right now but there is still some volatility that could show up. Bryan Blair – Ledge Partners: Okay, great. Thank you very much.

Thank you.

Thank you, sir. (Operator instructions) Alright. I have no further questions in the queue. I’d like to turn the call back over to Mr. Peter Leparulo for any closing remarks. Please go ahead.

Everybody thank you again for being on the call today and we will update you on our progress over the next quarter. Thanks again.

Ladies and gentlemen, this concludes the Novatel Wireless fourth quarter and full fiscal year earnings conference call. This conference will be available for replay after 4 O'clock Pacific Standard Time today through Friday, February 28th at midnight. You may access the replay system at anytime by dialing 303-590-3000 or toll free 800-405-2236, enter an access code number of 11126046. We thank you for your participation and you may now disconnect.