Netgear: Fiscal 1Q12 Financial Results

NETGEAR, Inc. reported financial results for the first quarter ended April 1, 2012.

Net revenue for the first quarter ended April 1, 2012 was $325.6 million, as compared to $278.8 million for the first quarter ended April 3, 2011, and $309.2 million in the fourth quarter ended December 31, 2011.

Net income, computed in accordance with GAAP, for the first quarter of 2012 was $25.1 million, or $0.65 per diluted share. This compared to GAAP net income of $21.2 million, or $0.57 per diluted share, for the first quarter of 2011, and to GAAP net income of $22.8 million, or $0.60 per diluted share, in the fourth quarter of 2011.

Gross margin on a non-GAAP basis in the first quarter of 2012 was 31.0%, as compared to 32.1% in the year ago comparable quarter, and 31.1% in the fourth quarter of 2011. Non-GAAP operating margin was 12.5% in the first quarter of 2012, as compared to 12.6% in the first quarter of 2011, and 12.4% in the fourth quarter of 2011. Non-GAAP net income was $0.73 per diluted share in the first quarter of 2012, as compared to non-GAAP net income of $0.65 per diluted share in the first quarter of 2011, and non-GAAP net income of $0.69 per diluted share in the fourth quarter of 2011.

The differences between GAAP and non-GAAP financial measures include adjustments, net of any tax effect, for amortization of purchased intangibles, stock-based compensation, acquisition related compensation, and litigation reserves. The accompanying schedules provide a reconciliation of financial measures computed on a GAAP basis to financial measures computed on a non-GAAP basis.

Patrick Lo, chairman and CE of NETGEAR commented: "The first quarter of 2012 represents another record breaking period for our net revenue and non-GAAP operating income. We continued to gain share in all markets due to the strength of our products and our ability to supply upside demand from our service provider customers. Year-on-year growth in the Americas provides another example of our exceptional operational execution and our ability to meet a surge in demand from our service provider customers, both on Docsis 3.0 and DSL gateways. The tremendous year-on-year growth we experienced in the APAC region was driven by market share gains across all three major markets: China, Australia, and Japan."

"Our Retail Business Unit revenue for the quarter ended April 1, 2012 was slightly down 1% sequentially, which is typical for the first quarter following the holiday season. On a year-over-year basis, our Retail Business Unit revenue was up 10%. Our Service Provider Business Unit revenue was up 27% sequentially, and up 49% over the prior year quarter. This was another record net revenue quarter for our Service Provider Business Unit. Our Commercial Business Unit revenue was down 11% sequentially, and down 6% over the prior year quarter, reflective of the continued fallout from the Thailand floods in 2011 and the resulting impact to the storage market."

Christine Gorjanc, CFO of NETGEAR, said: "We continue to drive operational excellence and we believe our ability to execute and meet customer demands on short notice gives us an advantage in the market place."

Looking forward, Mr. Lo added: "We expect to continue to benefit from the momentum on service provider demand in the second quarter 2012 while consumer retail demand is expected to be slightly down compared to the first quarter as a result of typical seasonality. Specifically, for the second quarter of 2012, we expect net revenue in the range of approximately $315 million to $330 million, with non-GAAP operating margin to be in the range of 11% to 12%."