Good afternoon ladies and gentlemen, thank you for standing by. Welcome to the Novatel Wireless Third Quarter 2010 Earnings Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will open for questions. (Operator instructions) I would now like to turn the conference over to Bill Wachovia, Vice President of Finance and Investor Relations. Please go ahead sir.

Good afternoon. And thank you for joining us on our call today. Today’s call will include a business overview from Chairman and CEO, Peter Leparulo, and a financial overview with fourth quarter guidance from Chief Financial Officer, Ken Leddon. As a reminder, this conference call is being broadcast today Thursday, October 28, 2010, over the phone and the internet to all interested parties. Information shared in this call is effective as of today’s date, and will not be updated. During this call, non-GAAP financial measures will be discussed. Reconciliations to the most directly comparable GAAP financial measures are included in our Third 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 also be archived there. Today’s discussion will 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 filing for a detailed discussion of potential risks. And now, I’d like to introduce Peter Leparulo, Chairman and Chief Executive Officer of Novatel Wireless.

Good afternoon everyone. I’d like to begin with a quick recap of our third quarter 2010 results, and then talk about our recent developments and our future plans. Revenues for the third quarter was 75.6 million, a 5.3% sequential quarterly increase and within our guidance range. We generated cash flow from operations of 9.2 million, bringing total year-to-date cash flow from operations to 13.9 million. The GAAP loss per share was $0.22 and was better than the range that we had forecast. Although the non-GAAP loss was $0.01 more than our forecast at $0.14 per share. However, our unit sales are higher than ever for core products and MiFi 2372 Intelligent Mobile hotspots. In Q3, we also set the stage for strong year-over-year growth and positive EBITDA in Q4. We are currently projecting a more than 45% sequential increase in revenues in the fourth quarter. Importantly, the fourth quarter will be primarily driven by our 3G technologies even as we begin to introduce next generation products across our full product portfolio. These will [indiscernible] growing backlog of orders from multiple channels. Moving now to our business update for the third quarter, we continue to focus on our C strategies and during the quarter, they made significant progress. First, we are moving aggressively to prepare for the upgrade by the major carriers to support the next generation inter-phases. These include dual [indiscernible] and Wi-Max. This development initiative continues across our entire product portfolio, from USEs to PC cards to MiFi 2372 Intelligent Mobile hotspots. We are working closely with lead operator development partners across each pair interphase and have made significant progress in R&D programs for each one factor. Our products will be on the leading edge in terms of the dramatic increase in speed and bandwidth that we’ll provide, and…

Thank you Peter. I will begin with the financial overviews of third quarter and then will provide our fourth quarter outlook. Please note that non-GAAP results exclude stock based compensation charges, as usual, which were $1.5 million this quarter. We also excluded M&A related charges and a non-charge tax benefit from non-GAAP results as we detailed in the reconciliation tables contained in our press release. Revenues for the quarter was 75.6 million, a 20% decline from the 94.3 million reported in the prior year period, but a 5.3% sequential increase from the second quarter. The year-over-year decline was due to lower embedded module sales and lower average selling prices for our modern products and MiFi devices in advance of the transition to next generation technologies. Revenues by product category are as follows; core products, which include USB modems, Express cards and combination products accounted for $43.6 million or 58% of sales. MiFi products accounted for 31.8 million or 42% of sales, and embedded products, 4.2 million. Now looking at sales by technology, EBDO products were 86% of sales and HSPA products, including HPSA + were 14%. From a geographic perspective, North American sales accounted for approximately 96% of total revenue and international sales for 4%. During the quarter, we shifted 7 operators and 3 OEMs in 19 countries. Leading customers in the quarter included Bell, Bright Star, Comcast, Sprint, Verizon, Virgin Mobile and WSA Distributing. Gross margins were below our guidance, primarily due to product mix. With our higher than anticipated proportion of lower margin USB modems, margins were also affected by substantial increases in shipping charges. We expect improvement in gross margin as we begin to rollout our new product lines for the technology upgrade in next generation wireless technology. Non-GAAP operating expenses were 18.8 million or 25% of…

Thanks Ken. Our focus over the next several months will be to continue our momentum in 3 principle areas; leading the transition of 4G on our entire product portfolio, capitalizing on new growth opportunities in multiple segments of the embedded phase and certifying and launching mobile MiFi OS platforms in both new and existing channels and across multiple inter-phases. And now Ken and I would like to answer your questions. Operator, please open up for Q and A.

Thank you. We’ll now begin the question-and-answer session. (Operator instructions). One moment please for the first question. And our first question from the line of Mike Walkley with Canaccord Genuity. Please go ahead

Thank you very much and congratulations on the strong revenue outlook. Just building with the [Ranson] revenue, I thought we might see a little more gross margin leverage, I understand it’s a module product, but maybe can you help us either think about LTE transition and how we should think about gross margins as that mix improves into 2011.

Mike, this is Ken speaking. Yeah, we [indiscernible] today is that gross margins of the 14 products will be improved over the 3G legacy products. The drop in margins on a 3G legacy products are not a surprise, we’ve seen this before and as we transition to 4G, we expect to transition the entire margin products with the new technologies.

Should we expect gross margins similar to prior inter-phase upgrades, maybe going back to ’07 or ’04 levels -- high 20s, low 30s, is that feasible or are the industry dynamics a little different today? Ken Leddon I think that -- our view today is that there’s going to be a much wider range of products going forward. We expect our product portfolio to not only consist of 4G products but also a significant mix of 3G for some period of time and then within the 4G product, the embedded products, you should probably know from the past, tend to have lower margin levels than the other USB products and MiFi type products due to the level of IT content in the products. And again, it’s kind of hard for us to predict what that mix will be, but I think going forward, our first objective was to grow revenue and get back on a revenue growth trend which I think we’re doing and then secondly to [indiscernible] an operating income, that’s the bottom line for us, I think, going forward is how we can grow that operating income line as the revenue base grows and as we maintain our spending discipline on the operating expenses.

Thanks. That makes a lot of sense. And Peter, maybe if you could just talk a little bit about the embedded modules. It seems like [indiscernible] especially as it relates to LTE, how should we think about that, do you think that business can get back to how it was maybe in ’08, ’09 revenue when [indiscernible] wasn’t as much of a competitor?

Sure Mike. First of all, we’ve spent a lot of time putting strategic alliances in place. We fetch market with 4G on the embedded side and we’ve also spent a lot of time with the GO1 OEMs and some very interesting internet devices on the embedded side so we’re very pleased with our progress on the sales side. When you look to how they ramp, all the GO1s have different plans on how they’re going to ramp. Some are going to have enterprise lines that are enabled with 4G, some of them are going to embed 4G and other lines and wait for the activations. We think it’s going to be a meaningful contributor of revenue as it ramps throughout 2011. We think we’ll begin to see it in the first quarter. We hope that it gets to a return to stroke levels for a couple of reasons; number one, the OEMs are always searching for how to increase their [tax] rate and some of the rate plans are becoming more usage based, more session based. That creates a certain amount of elasticity in the [tax] rates. As well, the [true foot] speeds are going to be dramatically increased so the user experience from before, we think will also increase the [tax] rate so we’re very hopeful on this space, it’s difficult to forecast into 2011 because the ramps are going to be fazed according to different platforms, but the forecast that we’ve seen and the rollout plans that we’ve seen make us very optimistic about this phase.

Great. Super. Thanks a lot. And one more question then I’ll pass it on. Can you talk a little bit about component constraints given your impressive ramps and revenue, is there any component constraints holding you back? Can you talk about maybe the component environment given your [indiscernible] and revenue? Thank you.

Sure. We work this everyday. There are component constraints. They are industry-wide constraints and we are relying on deliveries more on order than what’s on hand but we work this every day, we think we have it under control and we push everyday to get our allocation. But you’re absolutely right in suggesting that -- that’s where our effort is this quarter on component constraints. Lead times have also stretched out somewhat over the buildup of our backlog so it’s a big effort but we work it everyday.

Thanks very much and good luck.

Thank you

Thank you.

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

Again, congrats on the Apple, Verizon and their guys and the outlook. Obviously you’re going to need a lot of questions about the follow through now that you have the big win in hand. So as you look into the first quarter, the LT ramp would seem to be the obvious catalyst, can you first talk to us maybe is there a [cliss] in 1Q, and if there is, does LT handle it or do you expect kind of a smoother ramp? I know you said 2011 but I’m really trying to zero in on 1Q. Thanks.

Sure. It’s difficult to look into the future Matt, and how it goes, and you’re certainly right in saying that there is a component of Q4 that is based on individual promotion. I will say though that our 4G rollouts are not a large component of our Q4 guidance so at the end of the quarter, we expect to have significant product ramps and then to get 4 quarters of those product ramps in Q1, which kind of will be a seasonal quarter in telecom equipment as you know. As to how much those offset each other, it’s difficult to say but we still nevertheless believe that among the growth drivers we’ve put in place, which are the embedded, the new [indiscernible] MiFi and then the upgrade of everything of our product portfolio to both a dual carrier WiMax and LTE, those growth drivers will come online at the end of Q4 and moving into Q1.

Okay, and as you discuss the LTE rollout with your customers, it seems a little bit later that maybe some of the networks are going to be launched. Are you not going to be in the wave of promotions or are you just being conservative in terms of what you were discussing with us?

We expect to be in the first wave of promotions

So as the networks are launched, do you expect to know the [indiscernible] DLT networks are launched, know the top products ought to be there?

We are all hands on deck for that

Got you. And last question on the embedded side, [indiscernible] for Ken but for you. Just as you look at the embedded opportunity, obviously it’s been below here for a few years but you’ve been really working hard to rebuild that business. You mentioned netbooks and notebooks. You didn’t talk about tablets. What other form factors can you take the embedded wins into, can you get into the tablets base as well?

Sure. Good question. Absolutely, and we do have tablet design wins which we expect to be rolling out in 2011 as well for 4G. In addition, some of the other internet devices are items like TDAs, sometimes types of combination devices or a [quasite] E-book reader with a netbook on it. But netbooks is outside of the traditional PCs. Netbooks are probably the second largest device that we’re looking to in terms of design wins and rollout.

Alright, and a quick housekeeper for Ken. Ken, OCF in the quarter -- I see the 9 month number, I’m just trying to reconcile and make sure I’ve got it right, something around 10 million in the quarter, is that right?

The OCF number?

The operational cash flow?

Yeah, we mentioned that. Let me go to that real quickly here. OCF was 13.9 for the 9 months and the quarter was -- hold on a second, 9.2 for the quarter Matt.

Thanks Ken

Okay.

Ladies and gentlemen, (Operator instructions). And our next question comes from the line of Anthony Stoss with Craig-Hallum. Please go ahead.

Hi guys, Peter, just wanted to be straight on your guidance. Are you assuming anything from LTE, either the MiFi device or USB sticks in your guide for Q4?

LTE in our guidance? Yes we do have assumptions for LTE in our guidance.

Okay. Also can you -- maybe Ken can handle this also, number of different MiFi customers in Q3 -- what you assume for Q4. Does that number go up or it stays the same? Then I have one follow up.

I don’t have the number of MiFi customers in front of me. I can get that to you today Tony in terms of the actual number. In Q4, we expect to expand out our customer base on MiFi as we have developed it into the full operating system so we expect new customers on MiFi in Q4.

Okay, in addition to Verizon, you’ve seen other US based carriers talk about launching the iPad. Is it fair to assume that some of these new customers are in the US?

That point was more specifically -- I think what you’ll see is anything like that, we would do any type of announcement in conjunction with the program rather than ahead of it.

Okay. Also your international biz was running below kind of normal. Any views on when you can pick that up? Do you think LTE or other flavors of 4G -- is that going to be impactful as you start to go forward in early 2011 on the international side?

Good question. Europe certainly has quite a few issues to get results and it’s difficult when they get results. Some macro issues over there. As you know, it’s a very highly subsidized market with the operators. What we think we’ll do is we will really, in a few different areas, we will engage with Europe on the MiFi operating system because it feeds into quite a few of the operators in Western Europe into some of their models for the delivery of mobile content applications. Also, we engage with them in LTE exactly as you say, we have engaged with them on dual carrier for rollouts and have anchor customers on dual carriers as we go into 2011, and on the embedded side on the laptops, we have on our roadmap for platform launches on European operators.

Last question for you Peter, you talked about LTE products being in various stages or close to being final certification process. Is it fair to look at your guide as more in the conservative side than you’d normally be?

I would characterize our guidance as a balanced view of our current visibility and the number that we put out is based on that type of analysis so I wouldn’t go conservative or ambitious. I would simply say that it’s a balanced view of what we see today.

Okay, thanks guys.

Okay.

Thank you, and I’m sure no further audio questions at this time. I’ll turn the conference back to Peter Lepaluro. Please go ahead.

I’ll answer that. Thank you very much everybody for your time and your questions today and we’ll talk to you in the near future and look forward to it. Operator, you can end the call now please.

Thank you sir. Ladies and gentlemen, this concludes the Novatel Wireless third quarter 2010 earnings conference call. We thank you for your participation and you may now disconnect.