Founder, BWS Financial Inc

Hamed Khorsand

Founder

Independent Stock Specific Research

BWS Financial Inc

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Equity Bottom-Up

<ul>
<li>NETGEAR (NTGR) has implemented a hard reset to the business and expectations that could result in several more quarters of dismal results</li>
<li>NTGR reported first quarter results that were in line with our estimates. However, NTGR’s new CEO plans to significantly reduce inventory in the second quarter in one concentrated manner</li>
<li>NTGR disclosed it was not selling as many of its ultra-premium Orbi mesh systems as initially expected</li>
</ul>


NETGEAR (NTGR) has implemented a hard reset to the business and expectations that could result in several more quarters of dismal results
NTGR reported first quarter results that were in line with our estimates. However, NTGR’s new CEO plans to significantly reduce inventory in the second quarter in one concentrated manner
NTGR disclosed it was not selling as many of its ultra-premium Orbi mesh systems as initially expected


<ul>
<li>The first quarter is seasonally the softest for selling wireless routers. The expectations for NTGR are for the firm to generate positive free cash flow while revenue declines sequentially. </li>
<li>We are anticipating NTGR's cash per share to reach approximately $12 for the March quarter and maintain a forecast of $14 per share by the end of 2024</li>
<li>The price competition at the lower end remains unchanged and dependent on NTGR clearing out inventory ahead of the peak selling period in the second half of the year</li>
</ul>


The first quarter is seasonally the softest for selling wireless routers. The expectations for NTGR are for the firm to generate positive free cash flow while revenue declines sequentially. 
We are anticipating NTGR's cash per share to reach approximately $12 for the March quarter and maintain a forecast of $14 per share by the end of 2024
The price competition at the lower end remains unchanged and dependent on NTGR clearing out inventory ahead of the peak selling period in the second half of the year


<ul>
<li>NTGR continues to struggle to find the proper pace of the wireless router industry after surpassing expectations for the fourth quarter.</li>
<li>The Wi-Fi 7 upgrade cycle we have been looking forward seems more of a year end event. In the meantime, NTGR is accumulating cash through working capital conversion</li>
<li>NTGR should have approximately $12 per share of cash on its balance sheet by the end of the first quarter 2024. </li>
</ul>


NTGR continues to struggle to find the proper pace of the wireless router industry after surpassing expectations for the fourth quarter.
The Wi-Fi 7 upgrade cycle we have been looking forward seems more of a year end event. In the meantime, NTGR is accumulating cash through working capital conversion
NTGR should have approximately $12 per share of cash on its balance sheet by the end of the first quarter 2024. 


<ul>
<li>NTGR is making a CEO change just as the business has stabilized. Patrick Lo has retired and is being replaced by CJ Prober </li>
<li>NTGR has also issued updated fourth quarter results with the business achieving positive non-GAAP operating margin</li>
<li>NTGR is forecasting revenue of between $179 million and $189 million. We were already projecting revenue of $187.3 million and are keeping our estimate unchanged</li>
</ul>


NTGR is making a CEO change just as the business has stabilized. Patrick Lo has retired and is being replaced by CJ Prober 
NTGR has also issued updated fourth quarter results with the business achieving positive non-GAAP operating margin
NTGR is forecasting revenue of between $179 million and $189 million. We were already projecting revenue of $187.3 million and are keeping our estimate unchanged


<ul>
<li>NTGR should have ended 2023 on a positive note with demand for wireless routers showing continued pace of recovery after more than two years of sluggish growth.</li>
<li>NTGR’s focus on higher end products has put greater emphasis on profitability and converting customers to subscribers</li>
<li>NTGR’s focus on premium priced devices should push profit margins up if it was not for higher cost inventory NTGR is trying to clear out</li>
</ul>


NTGR should have ended 2023 on a positive note with demand for wireless routers showing continued pace of recovery after more than two years of sluggish growth.
NTGR’s focus on higher end products has put greater emphasis on profitability and converting customers to subscribers
NTGR’s focus on premium priced devices should push profit margins up if it was not for higher cost inventory NTGR is trying to clear out


United States

NETGEAR, Inc. provides networking products designed for small businesses and homes.  The Company's suite of products enables small businesses and homes to share Internet access, peripherals, digital content, and applications among multiple personal computers and other Internet-enabled devices.  NETGEAR markets and sells its products through distributors to a network of resellers.

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