SAN DIEGO (AP) – Wireless modem-maker Novatel Wireless reported a first-quarter loss on Thursday as sales of USB modems declined. But its results and outlook were better than analysts expected.

Novatel said it lost $2.5 million, or 8 cents per share, for the period ending March 31, compared with a profit of $1.8 million, or 6 cents per share, in the year-ago quarter. When excluding certain items, the company lost 4 cents per share.

Analysts polled by Thomson Reuters expected a loss of 11 cents per share.

Novatel's revenue fell 20 percent to $70.4 million, which was higher than the $66.4 million analysts expected.

The company said it saw higher demand for products that are embedded in electronic devices. But USB modem sales were down, particularly in Europe. Novatel cited rising competition and the difficult economy.

In the second quarter, Novatel expects a loss of a penny per share up to 4 cents per share and revenue of between $75 million and $80 million.

Analysts are looking for a loss of 9 cents per share and $67.2 million in revenue.

Novatel is supplying the MiFi 2200 Wi-Fi device that Verizon Wireless will start selling May 17 (story here).