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Segment Information And Concentrations Of Risk
 6 Months Ended
Jun. 30, 2011
Segment Information And Concentrations Of Risk  
Segment Information And Concentrations Of Risk

7. Segment Information and Concentrations of Risk

Segment Information

The Company reports segment information based on the "management" approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company's reportable segments.

The Company operates in the wireless broadband technology industry and senior management makes decisions about allocating resources based on the following reportable segments:

 

  •  

Mobile Computing Products segment - includes our MiFi products, USB and PC-card modems and Embedded Modules that enable data transmission and services via cellular wireless networks. All products within the segment represent a single product family.

 

  •  

M2M Products and Solutions segment - includes our intelligent asset-management solutions utilizing wireless technology and M2M communications acquired with our acquisition of Enfora.

Segment revenues and segment operating income (loss) represent the primary financial measures used by senior management to assess performance and include the net revenues, cost of net revenues, sales and operating costs and expenses for which management is held accountable. Segment expenses include sales and marketing, research and development, general and administrative, and amortization expenses that are directly related to individual segments. Segment operating income (loss) also includes acquisition-related costs, purchased intangible asset amortization, restructuring and integration costs.

 

The table below presents net revenues, operating income (loss) and identifiable assets for our reportable segments (in thousands):

 

     Three Months Ended
June 30,		     Six Months Ended
June 30,		  
     2011     2010     2011     2010  

Net revenues by reportable segment:

         

Mobile Computing Products

    $ 105,781      $ 71,823      $ 155,577      $ 144,062   

M2M Products and Solutions

      12,240        0        24,228        0   
  

 

 

    

 

 

    

 

 

    

 

 

  

Total

    $ 118,021      $ 71,823      $ 179,805      $ 144,062   
  

 

 

    

 

 

    

 

 

    

 

 

  

Operating income (loss) by reportable segment:

         

Mobile Computing Products

    $ 1,010      $ (8,014 )    $ (15,670 )    $ (12,704 ) 

M2M Products and Solutions

      (4,111 )      0        (9,501 )      0   
  

 

 

    

 

 

    

 

 

    

 

 

  

Total

    $ (3,101 )    $ (8,014 )    $ (25,171 )    $ (12,704 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  
     June 30,     December 31,              
     2011     2010              

Identifiable assets by reportable segment:

         

Mobile Computing Products

    $ 181,538      $ 217,445       

M2M Products and Solutions

      75,113        84,663       
  

 

 

    

 

 

      

Total

    $ 256,651      $ 302,108       
  

 

 

    

 

 

      

The Company has operations in the United States, Canada, Europe and Asia. The following table details the geographic concentration of the Company's assets in the United States, Canada, Europe and Asia (in thousands):

 

     June 30,
2011		      December 31,
2010		  

United States

    $ 248,291       $ 293,227   

Canada

      7,186         8,059   

Europe

      328         318   

Asia

      846         504   
  

 

 

     

 

 

  
   $ 256,651       $ 302,108   
  

 

 

     

 

 

  

The following table details the concentration of the Company's net revenues by geographic region based on the ship to location:

 

     Three months ended     Six months ended  
     June 30,     June 30,  
     2011     2010     2011     2010  

North America

      95.2 %      95.0 %      93.3 %      93.6 % 

Europe / Middle East / Africa

      3.3        4.7        4.2        5.6   

Asia / Australia

      1.5        0.3        2.5        0.8   
  

 

 

    

 

 

    

 

 

    

 

 

  
     100.0  %      100.0  %      100.0  %      100.0  % 
  

 

 

    

 

 

    

 

 

    

 

 

  

Concentrations of Risk

Substantially all of the Company's net revenues are derived from sales of wireless access products. Any significant decline in market acceptance of the Company's products or in the financial condition of the Company's existing customers would have an adverse effect on the Company's results of operations and financial condition.

A significant portion of the Company's net revenues are derived from a small number of customers. For the three months ended June 30, 2011, sales to our three largest customers accounted for 46.9%, 19.4%, and 12.3% of net revenues. In the same period in 2010, sales to our two largest customers accounted for 62.2% and 20.9% of net revenues. No other customer accounted for more than ten percent of total net revenues in the three months ended June 30, 2011 and 2010. For the six months ended June 30, 2011, sales to our three largest customers accounted for 42.7%, 20.2%, and 11.5% of net revenues. In the same period in 2010, sales to our two largest customers accounted for 59.1% and 12.9% of net revenues. No other customer accounted for more than ten percent of total net revenues in the six months ended June 30, 2011 and 2010.

The Company outsources its manufacturing to five third-party contract manufacturers. If one or more of these manufacturers were to experience delays, disruptions, capacity constraints or quality control problems in manufacturing operations, product shipments to the Company's customers could be delayed or its customers could consequently elect to cancel the underlying product purchase order, which would negatively impact the Company's revenues and results of operations.

The Company contracts with a number of suppliers in Japan. Some of these suppliers have been unable to deliver sufficient quantities of components as a result of the effects of the earthquake and tsunami that occurred in Japan in March 2011. The Company's M2M products are being impacted significantly by these component shortages. The shortages have limited the Company's ability to deliver against sales opportunities, negatively impacting gross margins.