"As expected, we successfully navigated a technology transition with our two largest customers, Cingular and Sprint, to our next generation AirCard (R) products. While this transition put short term pressure on our top line sequential performance, we were still able to grow revenue by 91% compared to the same period of 2005. More importantly, we were able to commence shipments of our new EV-DO Rev A AirCard 595 to Sprint and our new 3.6 HSDPA AirCard 875 to Cingular. In total, we launched four new products during the third quarter - a record for the company. Since the start of the third quarter, we also secured new strategic channel positions for our AirCard products, including Orange France and another major CDMA operator in North America. As we enter the fourth quarter, we have important new products shipping to key existing customers, new strategic channels established and new OEM design wins. We believe that our strengthened market position, combined with continued market expansion, have us well positioned to drive considerable revenue growth in the fourth quarter and into 2007."
Revenue for the three months ended September 30, 2006 amounted to $52.5 million, gross margin was $15.9 million, or 30.2% of revenue, operating expenses were $15.8 million and net earnings were $1.1 million, or diluted earnings per share of $0.04. During the third quarter of 2006, we reduced our estimate of certain royalty obligations, which was partially offset by a writedown of inventory. The net effect of these adjustments increased gross margin by $0.7 million. Excluding these adjustments, gross margin was $15.2 million, or 28.9% of revenue and net earnings were $0.4 million, or diluted earnings per share of $0.01. Our balance sheet remains strong, with $94.1 million of cash and short-term investments. [October 27, 2006]
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