NextWave Wireless Announces Third Quarter 2007 Financial Results

Business Wire, Nov 14, 2007

Company Reports 166 Percent Quarterly Revenue Growth Compared to Third Quarter 2006

SAN DIEGO -- NextWave Wireless Inc. (NASDAQ: WAVE), a global provider of wireless broadband and mobile multimedia products, filed its Quarterly Report on Form 10-Q for the third fiscal quarter which ended September 29, 2007. Financial schedules are included with this release.

NextWave reported that its third quarter revenues increased 166 percent compared to third quarter 2006. Revenues were $17.8 million for the third quarter of 2007, an $11.1 million increase over the third quarter in 2006 and a $4.9 million increase over the second quarter in 2007. The robust increase in quarterly revenue was driven by the continued growth in mobile device software royalties generated by the company's PacketVideo subsidiary and by increased sales of wireless broadband network equipment and subscriber devices by the company's IPWireless, Inc. subsidiary which was acquired in the second quarter of 2007.

"We are very pleased with the rapid revenue growth achieved by our PacketVideo and IPWireless subsidiaries this quarter and the transition from early-stage development to pre-commercialization status of our WiMAX chipset business," said Allen Salmasi, chairman and chief executive officer of NextWave Wireless Inc. "These achievements are the direct result of the investments we have made in our people, our business, and our technologies."

NextWave reported that its loss from operations was $91.7 million for the third quarter of 2007, representing an increase of $65.3 million, when compared to the loss from operations for the third quarter of 2006 and an increase of $32.2 million over the second quarter of 2007. Approximately forty percent, or $36.9 million, of the loss was attributable to the accounting for the acquisition of the GO Networks and IPWireless businesses during the first half of the year, and from the integration of the operations of those businesses. NextWave expects to realize improved contributions from these businesses in the future resulting from the achievement of operating efficiencies, improved margin contributions and the one-time nature of approximately $11.2 million of these charges.

Loss from operations during the third quarter of 2007, as compared to the third quarter of 2006, increased primarily due to increased operating expenses of $76.4 million, of which $18.3 million were non-cash expenses arising from the accounting for purchased in-process R&D and the amortization of intangible assets as a result of the acquisition of GO Networks and IPWireless and new spectrum properties. Approximately $31 million of the increase in operating loss was attributable to increases in R&D, of which $17.5 million was due to the growth of the semiconductor engineering team at NextWave Broadband and activities related to the commercialization of the company's family of WiMAX chipsets and $10.9 million was attributable to the addition of the IPWireless and GO Networks operations earlier in the year. The addition of the IPWireless and GO Networks operations in the first half of 2007 also accounted for additional increases in operating expenses of $16.2 million attributable to increases of $11.1 million in cost of revenues and $5.1 million in sales, marketing, and G&A expenses.

Excluding cost of revenues for the quarter of $17.3 million, total operating expenses for the third quarter were $92.2 million, of which thirty-three percent, or $30.3 million, were attributable to non-cash expenses, including $8.7 million for the amortization of intangible assets related to acquisitions, $6.9 million for non-cash share based and other compensation expense, $3.5 million for depreciation and $11.2 million for In-Process Research and Development (IPR&D) expense related to the acquisition of IPWireless, Inc.

Net interest expense for the third quarter of 2007 was $7.2 million, a $1.6 million increase over the third quarter of 2006 and a $1.2 million increase from the second quarter of 2007. The increase in interest expense over the second quarter and compared to the third quarter of 2006 was driven primarily by interest expense related to the issuance of $350 million of 7% Senior Secured Notes in July 2006, and available cash balance during the third quarter.

Net loss available to common shares for the third quarter of 2007 was $(107.8) million, or $(1.17) per share, compared to a net loss available to common shares of $(31.8) million, or $(0.39) per share for the third quarter of 2006 and a net loss available to common shares of $(72.1) million, or $(0.81) per share, for the second quarter of 2007.

During the third quarter of 2007, NextWave Broadband announced the release of its NW1000 Series WiMAX chipset; the first generation in a family of WiMAX baseband and multi-band RFIC chipsets designed to provide wireless device and network equipment manufacturers with an advanced platform to develop next-generation WiMAX mobile terminal and infrastructure products. The company's second-generation chips, designed for high-volume, full-commercial production is planned for the first half of 2008.