Good day and welcome to the Novatel Wireless Incorporated Second Quarter 2014 Earnings Conference Call. Please note this event is being recorded. On the call today are Interim Chief Executive Officer, Alex Mashinsky; President and Chief Operating Officer, Slim Souissi; and Interim Chief Financial Officer, Tom Allen. As a reminder, this conference call is being broadcast on Wednesday August 6, 2014 over the phone and 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. A reconciliation to the most directly comparable GAAP financial measures is included in the earnings release, which is available on the Investors section of the company's 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. All participants will be in listen-only mode. (Operator Instructions). After today's presentation, there will be an opportunity to ask questions. (Operator Instructions). Now I would now like to turn the call over to Alex Mashinsky, Interim Chief Executive Officer of Novatel Wireless. Please go ahead.

Thanks Andrew and thanks everyone for joining us on today’s call. Since taking the role of Interim CEO here at Novatel Wireless approximately eight weeks ago I have learned a lot and continue to learn everyday I am here. There is very impressive technology and talent at this company. I am excited to help lead the company through this transition period. First a bit about myself; I have been involved in the wireless communication space for several decades, starting several innovative companies such as GroundLink, Transit Wireless, Elematics and Arbinet. While building these companies I have built world class teams and won in large markets through differentiated strategies. As you may know the Board of Directors is actively engaged in the search for a full time CEO. However I want to ensure the investment community that I am committed to staying with Novatel through this transition period and plan on taking direct action in the near-term to help unlock the potential that I see here. I am not here as a babysitter. Novatel Wireless has best in class products, routinely deploying first generation technologies from companies like Qualcomm and Verizon. The challenge today as I see it is that Novatel Wireless is customer concentration and has margins that are below industry average. We have maintained a distinction between the mobile computing and M2M businesses in a world rapidly moving towards the Internet of Things. Since my arrival we have started integrating M2M and mobile computing and from now on we will be calling them IoT. We are currently shipping three products that combine our MiFi and M2M technologies. Historically, the company has not leveraged its MiFi brand, a leading edge technology to create IoT solutions outside of traditional channels. We have an existing base of 17 IoT products and over…

Thank you, Alex. And I guess following Alex's lead, I'll give you a little bit of my background since I arrived Monday, following Friday's arrival of Alex. So we both kind of landed here at Novatel at the same time. I’ve had 15 plus years of public company CFO experience most recently as the CFO and Chief Operating Officer of the Outdoor Channel Holdings Company here in Southern California. It's an exciting environment here and I am pretty impressed with the people that I am surrounded by especially at the second level. Obviously there's been lot of changes at the senior level. If you’ve had a chance to look at our earnings release this afternoon, you will no doubt have noticed that we had a lot of noise in our numbers and we'll get to that noise in a second. But as a general note, given the significant restructuring activities commenced by the company last fall, my focus will be primarily based on the comparison of our Q2 results against our Q1, 2014 results as opposed to the year ago quarter of 2013. Obviously that's a more relevant comparison. For the second quarter, our net revenues were $37.3 million with $27.5 million coming from our mobile computing segment and $9.8 million coming from our M2M segment. This represented a 23% decline from the first quarter of 2014. On a segment basis, our mobile computing revenue which was substantially generated from the sale of our MiFi products declined 24% over Q1 due to the continued aging of our current product offerings and to a lesser extent, due to the component shortages that Alex referenced earlier in his portion of the conversation here. And that by the way bridged the back half of the first quarter and the first part of the…

We will now begin the question-and-answer session. (Operator Instructions). We do have a question from Bryan Prohm of Cowen and Company. Please go ahead.

Hey. Good afternoon, Alex and Tom. How are you?

Good, thanks.

Thanks for taking my questions. So I get the lack of forward guidance for September given all that’s transpired over the past three months. So, let’s just touch on a couple of things. Tom, you already kind of touched on my cash question, so I’ll move into the product side. The inventory cleanup, is that largely done? It sounds like it impacted both product lines and some 2G modules in the M2M business but that's no longer a headwind and then some more legacy MiFi products?

I think we're pretty comfortable where we ended up at the end of June. Clearly you have to make assumptions about forward sales to arrive at what the right number is to reserve. And we obviously -- we're leaning towards being on the conservative side of middle in terms of those views given some uncertainty about some of the product that's moving towards the end of life stage but I think we're comfortable with where we ended up.

So, it's Alex here. We had several sales of products that we didn't think we should keep in our inventory and those were down at lower margin. These were all discontinued products or end of life products both on the module side and on the MiFi side. So, we're focusing all of our efforts on obviously future development and then I didn't think we should keep inventory of products that we don't need.

Totally understand. So, help me then get a better sense of where the MiFi roadmap is headed between now and the end of the year? I know you guys have had an LTE product cycle coming or VoLTE product cycle coming, is that largely expected to be or is that expected to be the majority of sales by year-end, what's the inflection point where we’re more than 50% or more fully into the new product cycle on MiFi?

So, we’re in transition, obviously we’re currently selling the 5510 and we're transitioning it to a new carrier aggregation product. That product just went through all necessary approvals; it went through LTE conformance testing and we are just waiting for it to basically be deployed by tier 1 customers. So if you think of it -- there is hand off between the 5510 and the new product. And because again, we just started here, I wanted to make sure when this hand off takes place and that's why we wanted to make sure we've provided guidance when we know when that happens and we know what volumes are and so on. But the new product we’re talking about is - the new MiFi product has some of the fastest speeds in the industry, it has one of the longest battery life, I mean it’s best of breed on almost all categories. So we're very proud of it. And I think when it hits the market, there is going to be a lot of demand for this product.

Great. One clarification question, you alluded to 180,000 assets under management up from 123 in 1Q, did I get that correct?

Yes, that's correct. Yes.

Is that the kind of sequential growth, we should be looking for, if we choose to model M2M that way or is it more of -- how should we think about that? Thanks.

So Bryan, this is Slim. So if you look at the larger actually number of activations that happened in Q2, a lot of it relates to Novatel Wireless entering the UBI business and starting to ship UBI products in Q1 and Q2, so a lot of the activations relate to our cloud solution tied to the UBI platforms. Alex mentioned that UBI sales represented about 10%, more than 10% of our revenue in Q2, we expect that to double in Q3 and this cloud platform also ties into the majority of other M2M product. So I would expect maybe to see activations on the software side in line with what we have disclosed this quarter from an absolute number standpoint.

Great, thanks. And then tell me little bit about the international sales efforts, it’s a question that I have always had for Novatel with some of these leading edge technology products wise and their more demand outside the Tier 1 carriers in the United States, but it sounds like you have already pushed a little bit on the revenue diversification there from 92 to 88 in the quarter? Thanks.

Yes so Alex here again. So the MiFi used to sell worldwide right and currently we really are only selling it I think in North America. We have plenty of other opportunities but we are going to push through that with product expansions and new verticals. So it’s going to take a little bit of time but I think you are going to start seeing growth of that product on a global scale. Most of the numbers that we reported and most of the growth there came from actually our M2M products as those are currently both certified and are sold in different continents, right, I mean almost everywhere and we are adding more use cases or more implementations, more integrations every day. These things just take time but when they deployed, they deploy in the Middle East, they deploy in Europe, they deploy in South America. So, it's really a global offering. So, we expect again more diversification and more growth on international side. And we expect our Tier 1 customers to continue growing, but represent less and less as a percentage of our total revenues.

Understood. Last question from me and then I'll pass it off. Can you quantify the revenue impact of supply constraints on MiFi sales. Was it similar to 1Q, I think there was about $5 million, if I remember right?

Yes. It may not have been quite that high in the second quarter maybe $2 million to $3 million, I think is the estimated number.

Okay. But that would put you in the midpoint of guidance though?

Yes.

Understood, alright. Thanks for the time gentlemen and good luck. Talk to you soon.

Thanks.

And at this time, I would like to turn the conference back over to Alex Mashinsky for his closing remarks.

I want to thank everybody for joining the call and we look forward to hearing from all of you on the next call. Thank you very much.