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NETGEAR® reports record fourth quarter and full year 2011 results
- Record fourth quarter 2011 net revenue of $309.2 million, as compared to $258.5 million in the comparable prior year quarter, 20% year-over-year growth
- Fourth quarter 2011 non-GAAP net income of $26.5 million, as compared to $16.1 million in the comparable prior year quarter, 65% year-over-year growth
- Fourth quarter 2011 non-GAAP diluted earnings per share of $0.69, as compared to $0.44 in the comparable prior year quarter
- 2011 net revenue was $1.18 billion, as compared to $902.1 million in 2010, 31% yearover- year growth
- 2011 non-GAAP net income of $105.2 million, as compared to $62.9 million in 2010, 67% growth
- 2011 non-GAAP diluted earnings per share of $2.77, as compared to $1.74 in 2010
- Company expects first quarter 2012 net revenue to be in the range of $310 million to $325 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 fourth quarter and full year ended December 31, 2011.
Net revenue for the fourth quarter ended December 31, 2011 was $309.2 million, as compared to $258.5 million for the fourth quarter ended December 31, 2010, and $301.8 million in the third quarter ended October 2, 2011. Net income, computed in accordance with GAAP, for the fourth quarter of 2011 was $22.8 million, or $0.60 per diluted share. This compared to GAAP net income of $13.6 million, or $0.37 per diluted share, for the fourth quarter of 2010, and to GAAP net income of $26.7 million, or $0.70 per diluted share, in the third quarter of 2011.
Gross margin on a non-GAAP basis in the fourth quarter of 2011 was 31.1%, as compared to 32.0% in the year ago comparable quarter, and 32.4% in the third quarter of 2011. Non-GAAP operating margin was 12.4% in the fourth quarter of 2011, as compared to 11.4% in the fourth quarter of 2010, and 12.5% in the third quarter of 2011. Non- GAAP net income was $0.69 per diluted share in the fourth quarter of 2011, as compared to non-GAAP net income of
$0.44 per diluted share in the fourth quarter of 2010, and non-GAAP net income of $0.79 per diluted share in the third 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, restructuring charges, acquisition related compensation and transitional expenses, impact to cost of sales from acquisition accounting adjustments to inventory, 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.
Net revenue for the full year 2011 was $1.18 billion, a 31% increase as compared to $902.1 million for 2010. Net income, computed in accordance with GAAP, for 2011 was $91.4 million, or $2.41 per diluted share. This net income was an 80% increase compared to net income of $50.9 million for 2010. Earnings per share, computed in accordance with GAAP, was $1.41 per diluted share for the full year 2010.
Patrick Lo, Chairman and Chief Executive Officer of NETGEAR commented, "We are extremely pleased with our full year 2011 business performance amid a challenging macroeconomic environment. Q4 2011 represented another new record in quarterly revenue, and our full year 2011 revenue well exceeded the $1 billion mark. In the fourth quarter 2011 we benefited from strong holiday retail sales, specifically in North America. This is particularly encouraging after the strong back to school season we experienced in Q3. We also experienced healthy year-over-year growth in all three geographic regions as we continue to carry positive momentum out of a very strong third quarter.
Our new products continue to exceed our expectations and enable us to gain market share."
"Our Retail Business Unit revenue was up 2% sequentially, and up 11% for the full year, while the Service Provider Business Unit was up 14% sequentially, and up 102% in 2011 as compared to 2010. The Commercial Business Unit revenue was down 8% sequentially, reflective of a shorter selling period in the quarter due to the holidays. The Commercial Business Unit revenue for the full year increased 16% as compared to 2010."
"We introduced another 18 new exciting products in the fourth quarter 2011 as we continue to build on our new product momentum. Notable products include the brand new desktop 2 and 4 Bay ReadyNAS® Duo and NV+ which were instant hits. In our managed switch lineup the new entry level 24 port Layer 2 Gigabit Managed Switch redefines price performance, and the Dual Band WiFi repeater further expanded our lead in the WiFi signal booster product segment. In January, at the Las Vegas International Consumer Electronics Show, we announced 8 new products, three of which were recipients of 2012 Innovations Design and Engineering awards: the Media Storage Router, the WiFi Dual Band Gigabit DSL Modem Router, and the mobile version of the NETGEAR Genie® home network configuration and management tool."
Christine Gorjanc, Chief Financial Officer of NETGEAR, said, "We ended the fourth quarter of 2011 with $353.7 million in cash, cash equivalents and short-term investments driven by cash flow from operations of $32.9 million.
Our net inventory ended at $163.7 million, with 5.2 turns, and DSO's of 76 days in the fourth quarter 2011 in line with seasonal trends."
Looking forward, Mr. Lo added, "In these times of economic uncertainty, we continue to win market share on new product introductions. We believe our growth in 2012 will continue to be based on our strong new product pipeline and our expansion into new channels and emerging markets. Specifically, for the first quarter of 2012, we expect net revenue in the range of approximately $310 million to $325 million, with non-GAAP operating margin to be in the range of 11% to 12%."
Investor Conference Call / Webcast Details
NETGEAR will review the fourth quarter and full year 2011 results and discuss management's expectations for the first quarter of 2012 today, Tuesday, February 7, 2012 at 5 p.m. EST (2 p.m. PST). 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 EST (9 p.m. PST) on Tuesday, February 14, 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 387561.
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