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Segment Information and Concentrations of Risk
 12 Months Ended
Dec. 31, 2012
Segment Information and Concentrations of Risk [Abstract]  
Segment Information and Concentrations of Risk
12. Segment Information and Concentrations of Risk

Segment Information

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 was established as a result of our acquisition of Enfora in 2010. It includes our intelligent asset-management solutions utilizing cellular wireless technology, and M2M communication devices, and embedded modules that enable M2M data transmission and services via cellular wireless networks.

Segment net 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 other operating expenses for which management is held accountable. Segment operating expenses include sales and marketing, research and development, general and administration, and amortization expenses that are directly related to individual segments. Segment earnings (loss) also includes acquisition-related costs, purchase price amortization, impairment charges, restructuring and integration costs.

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

 

                         
    Year Ended December 31,  
    2012     2011     2010  

Net revenues:

                        

Mobile Computing Products

   $ 312,508     $ 358,106     $ 332,464  

M2M Products and Solutions

     31,780       44,756       6,478  
   

 

 

    

 

 

    

 

 

  

Total

   $ 344,288     $ 402,862     $ 338,942  
   

 

 

    

 

 

    

 

 

  

Operating income (loss) :

                        

Mobile Computing Products

   $ (22,924 )    $ (13,764 )    $ (23,027 ) 

M2M Products and Solutions

     (65,819 )      (19,963 )      (1,975 ) 
   

 

 

    

 

 

    

 

 

  

Total

   $ (88,743 )    $ (33,727 )    $ (25,002 ) 
   

 

 

    

 

 

    

 

 

  

 

                 
    Year Ended December 31,  
    2012     2011  

Identifiable assets:

                

Mobile Computing Products

   $ 141,045     $ 181,180  

M2M Products and Solutions

     20,486       67,999  
   

 

 

    

 

 

  

Total

   $ 161,531     $ 249,179  
   

 

 

    

 

 

  

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

 

                 
    Year Ended December 31,  
    2012     2011  

United States

   $ 157,661     $ 243,030  

Canada

     2,836       4,764  

Europe, Latin America and Asia

     1,034       1,385  
   

 

 

    

 

 

  
    $ 161,531     $ 249,179  
   

 

 

    

 

 

  

The following table details the Company’s concentration of net revenues by geographic region based on shipping destination:

 

                         
    Year Ended December 31,  
    2012     2011     2010  

United States and Canada

     93.1 %      93.5 %      95.0 % 

Latin America

     2.4       0.0       0.0  

Europe, Middle East and Africa

     4.1       4.0       4.7  

Asia and Australia

     0.4       2.5       0.3  
   

 

 

    

 

 

    

 

 

  
      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 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 come from a small number of customers. One customer accounted for 57.5% of 2012 net revenues. Two customers accounted for 50.8% and 13.1% of 2011 net revenues. Two customers accounted for 55.7% and 21.8% of 2010 net revenues. All significant customers are included in the Company’s Mobile Computing Products segment.

A significant portion of the Company’s accounts receivables comes from a small number of customers. At December 31, 2012, the Company had three customers who accounted for 20.7%, 18.5% and 11.5% of total accounts receivable. At December 31, 2011, the Company had two customers who accounted for 46.5% and 19.8% of total accounts receivable.

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