On a non-GAAP basis, gross margin was 30.7 percent of revenue in the second quarter of 2012, compared to 28.0 percent of revenue in the second quarter of 2011. Operating expenses were $38.8 million and earnings from operations were $12.7 million in the second quarter of 2012, compared to operating expenses of $40.0 million and a loss from operations of $0.8 million in the second quarter of 2011. Net earnings were $9.3 million, or $0.30 per diluted share, in the second quarter of 2012 compared to a net loss of $1.0 million, or $0.03 per diluted share, in the second quarter of 2011.

The cash, cash equivalents and short-term investments balance at the end of the second quarter of 2012 was $125.3 million, up $18.5 million from the end of the first quarter of 2012. During the second quarter of 2012, we purchased and cancelled 400,000 common shares in the open market for $3.3 million in connection with our normal course issuer bid.

Non-GAAP results exclude the impact of stock-based compensation expense, acquisition costs, restructuring costs, integration costs, acquisition amortization, foreign exchange gains or losses on foreign currency contracts as well as translation of balance sheet accounts, and certain tax adjustments. We disclose non-GAAP amounts as we believe that these measures provide our shareholders with better information about actual operating results and assist in comparisons from one period to another. The reconciliation between our GAAP and non-GAAP results is provided in the accompanying schedules.

Financial guidance

Financial guidance for the third quarter of 2012 excludes any impact from the acquisition of the Sagemcom M2M business. In the third quarter of 2012, we expect revenue and gross margin to decrease on a sequential basis driven primarily by normalizing sales patterns in our Mobile Computing business, following an exceptional Q2.

Q3 2012 Guidance
         

Consolidated Non-GAAP
 
Revenue $157.0 to $162.0 million
 
Earnings from operations $6.0 to $8.0 million
 
Net earnings $4.3 to $5.7 million
 
Earnings per share $0.14 to $0.19 per share

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