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Netgear® Reports Record First Quarter 2012 Results
- First quarter 2012 net revenue of $325.6 million, as compared to $278.8 million in the comparable prior year quarter, 16.8% year-over-year growth
- First quarter 2012 non-GAAP net income of $28.1 million, as compared to $24.2 million in the comparable prior year quarter, 16.1% year-over-year growth
- First quarter 2012 non-GAAP diluted earnings per share of $0.73, as compared to $0.65 in the comparable prior year quarter, 12.3% year-over-year growth
- Company expects second quarter 2012 net revenue to be in the range of $315 million to $330 million, with non-GAAP operating margin in the range of 11% to 12%
NETGEAR, Inc. (NASDAQGM: NTGR), a global networking company that delivers innovative products to consumers, businesses and service providers, today 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 Chief Executive Officer 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, Chief Financial Officer 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%."
Investor Conference Call / Webcast Details
NETGEAR will review the first quarter 2012 results and discuss management's expectations for the second quarter of 2012 today, Wednesday, April 25, 2012 at 5 p.m. EDT (2 p.m. PDT). The dial-in number for the live audio call is (201) 689-8471. A live webcast of the conference call will be available on NETGEAR's website at http://investor.netgear.com. A replay of the call will be available 2 hours following the call through midnight EDT (9 p.m. PDT) on Wednesday, May 2, 2012 by telephone at (858) 384-5517 and via the web at http://investor.netgear.com. The account number to access the phone replay is 392444.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 for NETGEAR, Inc.:
This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. The words "anticipate", "expect", "believe", "will", "may", "should", "estimate", "project", "outlook", "forecast" or other similar words are used to identify such forward-looking statements. However, the absence of these words does not mean that the statements are not forward-looking. The forward-looking statements represent NETGEAR, Inc.'s expectations or beliefs concerning future events based on information available at the time such statements were made and include statements, among others, regarding NETGEAR's expected revenue and operating margin, expectations regarding service provider demand, and expectations regarding consumer retail demand. These statements are based on management's current expectations and are subject to certain risks and uncertainties, including, without limitation, the following: future demand for the Company's products may be lower than anticipated; consumers may choose not to adopt the Company's new product offerings or adopt competing products; product performance may be adversely affected by real world operating conditions; the Company may be unsuccessful or experience delays in manufacturing and distributing its new and existing products; telecommunications service providers may choose to slow their deployment of the Company's products or utilize competing products; the Company may be unable to collect receivables as they become due; the Company may fail to manage costs, including the cost of developing new products and manufacturing and distribution of its existing offerings; the Company may fail to successfully continue to effect operating expense savings; channel inventory information reported is estimated based on the average number of weeks of inventory on hand on the last Saturday of the quarter, as reported by certain of NETGEAR's customers; changes in the level of NETGEAR's cash resources and the Company's planned usage of such resources; changes in the Company's stock price and developments in the business that could increase the Company's cash needs, fluctuations in foreign exchange rates, and the actions and financial health of the Company's customers. Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Further information on potential risk factors that could affect NETGEAR and its business are detailed in the Company's periodic filings with the Securities and Exchange Commission, including, but not limited to, those risks and uncertainties listed in the section entitled "Part I - Item 1A. Risk Factors," pages 11 through 33, in the Company's Annual Report on Form 10-K for the year ended December 31, 2011, filed with the Securities and Exchange Commission on February 29, 2012. NETGEAR undertakes no obligation to release publicly any revisions to any forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Use of Non-GAAP Financial Information:
To supplement our consolidated financial statements presented on a GAAP basis, NETGEAR uses non-GAAP financial measures, which are adjusted to exclude certain expenses and tax benefits, where applicable. We believe non-GAAP financial measures are appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our current period GAAP results are made with the intent of providing both management and investors a more complete understanding of NETGEAR's underlying operational results and trends and our marketplace performance. For example, the non-GAAP results are an indication of our baseline performance before charges that are considered by management to be outside of our core operating results. In addition, these adjusted non-GAAP results are among the primary indicators management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial measures prepared in accordance with generally accepted accounting principles in the United States.
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