XML 54 R12.htm IDEA: XBRL DOCUMENT v2.4.0.8
Segment Information and Concentrations of Risk
 6 Months Ended
Jun. 30, 2014
Segment Reporting [Abstract]  
Segment Information and Concentrations of Risk

6. 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 senior 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:

 

  •  

The Mobile Computing Products segment includes the Company’s MiFi products, USB and PC-card modems and embedded modules that enable data transmission and services via cellular wireless networks.

 

  •  

The Machine-to-Machine (“M2M”) Products and Solutions segment was established as a result of the Company’s acquisition of Enfora in 2010. It includes the Company’s 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 revenues and segment operating 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 expenses include sales and marketing, research and development, administration, and amortization expenses that are directly related to individual segments. Segment loss also includes acquisition-related costs, purchase price amortization, restructuring, impairment and integration costs. The table below presents net revenues from external customers, operating loss and identifiable assets for the Company’s reportable segments (in thousands):

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2014     2013     2014     2013  

Net revenues by reportable segment:

         

Mobile Computing Products

    $ 27,497      $ 80,823      $ 63,695      $ 156,443   

M2M Products and Solutions

      9,773        10,301        21,859        20,602   
  

 

 

    

 

 

    

 

 

    

 

 

  

Total

    $ 37,270      $ 91,124      $ 85,554      $ 177,045   
  

 

 

    

 

 

    

 

 

    

 

 

  

Operating loss by reportable segment:

         

Mobile Computing Products

    $ (12,246 )    $ (3,348 )    $ (18,372 )    $ (8,848 ) 

M2M Products and Solutions

      (5,152 )      (4,396 )      (7,953 )      (8,081 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total

    $ (17,398 )    $ (7,744 )    $ (26,325 )    $ (16,929 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  
                 June 30,
2014		     December 31,
2013		  

Identifiable assets by reportable segment:

         

Mobile Computing Products

        $ 73,853      $ 96,516   

M2M Products and Solutions

          13,010        14,949   
      

 

 

    

 

 

  

Total

        $ 86,863      $ 111,465   
      

 

 

    

 

 

  

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):

 

     June 30,
2014		      December 31,
2013		  

United States

    $ 85,407       $ 108,932   

Canada

      707         808   

Europe, Latin America and Asia

      749         1,725   
  

 

 

     

 

 

  
   $ 86,863       $ 111,465   
  

 

 

     

 

 

  

 

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

 

     Three months ended
June 30,		     Six months ended
June 30,		  
     2014     2013     2014     2013  

United States and Canada

      88 %      96 %      90 %      95 % 

Latin America

      1        1        1        1   

Europe, Middle East and Africa

      10        3        8        4   

Asia and Australia

      1        0        1        0   
  

 

 

    

 

 

    

 

 

    

 

 

  
     100 %      100 %      100 %      100 % 
  

 

 

    

 

 

    

 

 

    

 

 

  

During the third quarter of 2013, the Company began implementing restructuring initiatives designed to refine its business operations, reduce expenses to better correspond to its decreased revenue and capitalize on synergies in its target markets with the goal of driving long-term profitability.

In connection with the restructuring plan, the Company made organizational changes across some of its Mobile Computing and M2M business operations to consolidate its research and development resources and consolidate global manufacturing activities. The Company also closed development sites to drive efficiencies, enhance margins and improve capital efficiency.

Historically, the Company’s business units have their own management teams and offer different products and services. The business units have been aggregated into two reportable business segments based upon the nature of the products or services produced, the type of customer for the products, the similarity of economic characteristics and the manner in which management reviews results, among other considerations. Due to the ongoing restructuring activities discussed in Note 10, recent changes in executive management and assigned responsibilities, product transfers between some of the Company’s subsidiaries and increasing synergies between its existing segments, the Company is currently reevaluating its reportable segments composition.

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 or its customers’ 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 are derived from a small number of customers. For the three months ended June 30, 2014, sales to the Company’s two largest customers accounted for 37% and 12% of net revenues, respectively. In the same period in 2013, sales to its largest customer accounted for 65% of net revenues. For the six months ended June 30, 2014, sales to the Company’s largest customer accounted for 38% of net revenues. In the same period in 2013, sales to its largest customer accounted for 63% of net revenues. The Company outsources its manufacturing to several third-party contract manufacturers. If one or more of these manufacturers were to experience delays, including delays caused by component shortages, 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 their underlying product purchase orders, which would negatively impact the Company’s revenues and results of operations.