Good day and welcome to the Novatel Wireless, Inc. Fourth Quarter 2012 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, Blueshirt Group for Investor Relations. Please go ahead.

As a reminder, this conference call is being broadcast on Thursday, February 21, 2013 over the phone and 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. A reconciliation to the most directly comparable GAAP financial measures are included in the earnings release which is available on the Investors Relations 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 the 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. Peter?

Good afternoon everyone and thank you for joining our call today. Our fourth quarter continued to be a period of building for the company as we executed on the strategy and businesses decisions that we outlined last quarter. We continue to make key progress on our strategic initiatives in both mobile computing and M2M and we are expecting significant sequential revenue growth and bottomline improvement in the first quarter as we realign the business to return to profitability and sustainable growth. We believe the steps we have taken fundamentally position the company for a much better 2013. In mobile broadband, our focus remains to lead the market in innovation, expand our customer base, expand our product set at existing customers and address new markets enabled by 4G networks. We've made progress on these initiatives with two new product launches since our last report. MiFi 2 launched by AT&T as MiFi Liberate and our MiFi 5510L launched by Verizon Wireless. MiFi 2 which launched in the middle of the fourth quarter with AT&T has taken mobile hotspots to the next levels. It is the first mobile hotspot with a touch-screen display, functionality that was once on a web page is now at the user’s fingertips. MiFi 2 has a breakthrough user experience in terms of discoverability and interactivity with one-touch features for accessing data usage summary, on-board shared storage, location based services and support. It's local media server allows users to share movies, music, presentations and photos from micro-SD cards and broadcast these files straight from the device to DLNA-enabled TVs or other devices. MiFi 2 also has a full work day of connectivity with live 4G streaming and supports global data connection. The MiFi 2 has garnered critical acclaim from such publication as PC Magazine, ZDNet and GIZMODO, whose editor…

Thank you, Peter. I will begin with a financial overview of the fourth quarter and then will provide our outlook for the first quarter of 2013. Revenue for the fourth quarter was $70.7 million within the range we forecasted last quarter. To break that revenue performance down by business segment, our mobile computing revenue in the quarter was $63.9 million. This includes $47.9 million of MiFi revenues, $10.2 million of USB modems, combination cards and related products and $5.8 million from our PC OEM business. And our M2M products and solutions totaled $6.8 million. From a geographic perspective, sales in North America accounted for approximately 96% of total revenue. Our operating loss for the quarter was $14.6 million and our net loss for the fourth quarter was $14.9 million or a loss of $0.45 per share. These quarterly results include the following non-cash charges or adjustments. Share based compensation expense of $1.1 million, employees stock purchase plan cancellations charges of $1 million, and the intangible asset valuation increase of $300,000; depreciation and amortization up $2.6 million and net deferred income tax asset charges of $300,000. These non-cash charges or adjustments totaled $4.7 million or $0.14 per share. I will now discuss our non-GAAP results for the quarter. Today’s press release provides the reconciliation of our GAAP to non-GAAP fourth quarter results. Non-GAAP gross margin in the fourth quarter was 19.6%. This is the lower guidance level of 22% to 24% and was impacted by inventory valuation adjustments in a less favorable product mix. Non-GAAP operating expenses totaled $26.4 million and looking at operating expense by category R&D expense are $14.4 million compares to the prior quarter of $14.1 million as we continue to invest in our M2M portfolio and new developments in our MiFi product line. Sales and marketing expenses…

Thanks very much Ken. In summary, while the fourth quarter continued to be part of the transactional period for the company, we have made important progress in our business that sets us up for a better 2013. In mobile broadband, our focus remains to lead the market in innovation, expand our customer base and expand our product set at existing customers. We will continue to work closely with leading carriers on new design wins and bringing new products to market. And in M2M, we aim to continue to grow our generation skipping product portfolio, win new customers and expand with existing ones building upon the new customer traction we began last year. And with that, Ken and I would now be happy to answer any questions that you might have. Operator please open up the line for Q&A.

We will now begin the question-and-answer session. (Operator Instructions) Our first question comes from Mike Walkley of Canaccord Genuity. Please go ahead.

This is [Sid] on for Mike. Peter, a couple of quick questions. Firstly, just wanted to talk about the competitive dynamics which you are seeing at Verizon with regards to your low cost Chinese competitor ZTE, given that you've launched the two recent products in the last quarter or so and especially your cost competitive MiFi 5510L, what kind of market share gains or losses or what kind of market share gains or losses or what kind of pricing pressure are you seeing at Verizon currently?

I think the competitive dynamics at Verizon are that we currently occupy the high-end skew of the Verizon, the premium skew with our 4610, with the extended battery that we launched in Q4. You are right in suggesting that we have been impacted at the low end and have to share that segment channel position with another competitor, a low end competitor. What we believe will happen is that the introduction of our new mobile hotspot addresses that value position at Verizon. Generally, Verizon has segmented the market into two different skews, the high end and the low end. So as we see things currently, we expect to have both positions. The market dynamics, the landscape dynamics, it can change in ebbs and flows but that product that we launched right now is meant to address that low end value position with greater performance indicators than that segment of the market has been addressed in the past.

Great, thanks. And just to follow-up, given that one of your key competitors has recently exited the mobile hotspot space by selling the business. Just wanted to know what kind of opportunities do you see given these temporary hiatus in terms of winning business in both AT&T as well as potentially Sprint?

That’s a good question. I think, Sid, we’ll see; the mobile computing business, as you know, is a lot more complex than parties originally anticipate when they enter into it in terms of the intensity of support and the intensity of development and milestone driven business; we have to put a quite a bit of infrastructure around the operator customers to achieve that. We don't under estimate anybody in that space, but I think we will have to see where that goes. In terms of additional operators, I think we have talked about on previous calls that we expect to have channel positions in North America at all three major operators and we are a development partner with each of those three major operators. But as I said, we will see what the landscape looks like on given their exit from that space.

The next question comes from Cobb Sadler of Catamount Strategic Advisors. Please go ahead. Mr. Sadler, please go ahead. (Operator Instructions) The next question will come from Bryan Prohm of Cowen & Company. Please go ahead. Bryan Prohm - Cowen & Company: On numbers that I wanted to take up, but I didn't hear, LTE as a percent of revenue in the quarter was that stated in release or on the call, I am not sure that I caught it?

This is Kenneth speaking, no we did not take that in the release, but it was a very significant amount was the majority of our business in Q4 as far as mobile computing business goes, we have very a limited 3G business or legacy products in the mobile computing arena right now. Bryan Prohm - Cowen & Company: The legacy products especially in MiFi given the limited footprint of 4G globally, is that a business that you anticipate continuing through ’13 at least to some degree or maybe that's not in North American business but at least on an international basis, is that an opportunity?

Well, I think in terms of how 4G goes even in North America, the market does not stagnate in terms of where the interfaces go. So the way we see it is that there is a carrier aggregation upgrade in North America that will address with that market, with that product line. There's also quite a bit of bandwidth dispersion as LTE upgrades particularly at Sprint. So there is still opportunity in that space with upgrade cycles in North America and we have design wins on that into 2014. I'll also say that because of 4G as it becomes more ubiquitous in North America, we believe that there are adjacent products and adjacent markets that the operators will address such as in vehicle and home connectivity and those are spaces that we also look forward to addressing with carrier partners. Bryan Prohm - Cowen & Company: Yeah you mentioned in your prepared remarks, is that something that you see as potentially driving revenue in ’13 or is that more of a longer term opportunity once LTE is more mature?

I think once LTE actually is, it doesn't have to get to LTE only for that but LTE, the coverage on LTE is pretty expensive at the lead carriers in terms of POP coverage. So with that and with the efficiency and capacity of that LTE allows and the efficiency of data usage for byte usage, we actually see that taking place in 2013 to begin to take place in 2013 and then to expand out in 2014.

The next question comes from Cobb Sadler of Catamount Advisors. Please go ahead.

On LTE hotspot business I guess overall business 96% of revenues in North America but you know there's 60 LTE networks, 60 countries with at least one LTE network up and running I mean, can your international business grow? Are you targeting those carriers or just trying to take share within the US?

Cobb we are focused on the US. We look to the additional LTE rollouts but we look to it on a targeted basis. Even though, the LTE protocol is being deployed there are quite a bit of as I said bandwidth dispersions on it. So it’s not as though all of the R&D development that we do in North America can be leveraged into those markets. Some of it can but we look to that more outside the US more on an opportunistic basis to make sure that we can get an ROI for the additional development that we would have to do for that.

And do you think the international deployment will go up from 4% to higher number a year out, two years out?

I actually think that if you turn to the M2M side that's where we believe that our international growth will come from, mostly in Europe and Latin America on the M2M side is what we are focused on in investing our R&D dollars in.

And then just I had a question on with MiFi Liberate by AT&T. Do you have internal or can you share with us what was your internal market share forecast is at the carrier? It's a new product, it’s a relatively, the nominal revenue in AT&T and you know, what percent of that market or the LTE hotspot market do you think that you might be able to get eventually at AT&T?

It's fairly early right now, and it's hard to tell the precision because the market share really in part is reflected by how many points of sale there are for the product, and we launched an AT&T stores, we launched in B2B channels and as I said, it’s just getting into some national retail. So it's a little bit difficult to tell. I can tell you that AT&T in Q4 was a 10% customer [routers] and that was with a partial quarter launch. Some of those very well could be initial stocking orders that's it's difficult to tell, selling versus the ordering patterns on it but nevertheless, I will say that we believe that the performance indicators on that product, the usability of that product and the feedback that we got on the product both from the press as well as anecdotal feedback from the channels are that it really has advanced the MiFi product category with much greater interactivity and much greater in each cases. We will see if that translates into greater ARPU but in terms of the functionality of that product, the user experience, we think it's the best one out there and we're as excited as you to see the channel position on that product. Let me just add. I also would highlight that that is a product where we can leverage the R&D done on that with additional carriers because of commonality with different bandwidth and that’s what we are also focused on doing to them to expand that product into other carriers.

Great, and just moving on to Verizon, can you talk about what is the size of the low end versus high end market, as B2B gave you a hard time at the low end hopefully gain all that share back for at least a while but, how big is the low end relative to high end, do you think at Verizon?

It’s a good question, I really can only speak somewhat anecdotally and somewhat from the gut on that, but we believe that most cost driven sales are done at company on stores, national retailers as well typically promote only one product and that often is the product that as well drives cost driven sales on it. The B2B channels are tend to stay with the incumbent product because of the reliability the brand frankly and the known performance to the types of equipment. My sense is that probably comes out to about a 50-50 split.

Okay, great and then just on valuation, you got some of recent comp --- share (inaudible) other business when market share is losing business at that for putting up 0.6 to sales and I look to your new sales for the entire company its certainly less than $10 million, how do you explain the severity and what were the plans to basically leverage the value realized in inheriting a company?

We believe that mobile computing is still a grown market and in the future it will grow as well and certainly the operators are heavily focused on wireless data. As I said, how we will grow in mobile computing is really by two ways. We believe as we move forward, the R&D will be able to be much more efficient with a common architecture in both 3G and 4G supporting many platforms, many devices in both mobile computing and M2M. As that R&D becomes more efficient, our goal is to have our growth drivers on the revenue cover that R&D much more effectively. That applies both to the mobile hotspot product category as well as some of the additional adjacent products that I suggested as we get towards the second half of the year. Those products will as well be able to leverage the core architecture that we use for mobile hotspots. So with that, we think that revenue will scale and cover the R&D much more efficiently. You are absolutely right though, the challenge in this space has been that the R&D has gone up per product, the products have become more complex and the market has been divided somewhat. That will start to reconsolidate if you will the way we see it going forward and allow us to get some leverage built into both our into our business model overall.

Have you seen similar buyers to net year I mean or was the CR asset the only one that was being looked at or do you think that, have you heard some of the other interested buyers I guess is the question?

Yeah, that's, I don't if who and how that transaction took place, I mean what you are talking about in terms of us, we are focused on executing our own strategy at this time and I'm not sure this will be the forum to (inaudible) in any event.

(Operator Instructions) There are no further questions. This concludes the conference. Thank you for attending today's presentation. The conference replay will be available after 06:45 PM Eastern Time. To listen, you may dial 412-317-0088 or 877-344-7529. When prompted please enter conference number 10024586. Thank you. You may now disconnect your lines.