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Netgear Shares Crash After ‘Shock’ Q1, 2023 Result

Struggling networking Company Netgear has reported a 20% slump in revenues and a loss of A$23.5 million. Their share price slumped 16% on the news.

Best known in Australia for selling overpriced WiFi routers, the US business reported net revenues of $932.5 million, down 20.2% compared to the year-ended December 31, 2021.

APAC revenues are down 10%, after the business also fell in the prior quarter.

During the past year shares in Netgear, who a controlling shareholder in security camera business Arlo are, has seen their share value fall 34% during the past year.

Management in Australia are not returning calls.

On an investor call, management said, “As a result of the uncertain macroeconomic environment and concerns over their own operations, our channel partners continue to materially reduce their inventory to historically low levels, greatly impacting our top line.”

The Company that is trying to go after the premium end of the market, in the hope of higher margins, claim “Higher margin products are the key to delivering growth and increasing profitability in the long term.”

“While we made progress in destocking in the fourth quarter, our retail partners continue to right size the inventory levels and we continue to expect that to carry into 2023.”

The business admitted their consumer networking business was struggling, leading to a full year non-GAAP operating loss of $23.5M million.

The Company’s APAC net revenue was US$37.2 million, which was down 10.8% from the prior year. It also fell in the prior 2020 year.

Netgearā€™s ‘Connected Home’ segment, which includes Orbi, Nighthawk, Nighthawk Pro Gaming, Armor and Meural Brands, generated net revenue of US$149 million during the quarter, down 14.4% on a year-over-year basis.

Currently the business is trying to focus on the residential custom integration market, in an effort to increase sales of their AV over IP business.

Executives claimed they are investing R&D resources into developing unique AV over IP products that will transform the TV broadcast industry.

In the 5G mobile hotspots, the Nighthawk M6 and M6 Pro are continuing to experience strong demand, in double-digit growth year-over-year the Company reported.

CEO Patrick Lo claimed that, “With the upcoming Wi-Fi 7 upgrade cycle on the way, continued momentum behind our paid subscriber additions and a rapidly accelerating transition from analogue to digital IP-based over Ethernet connections for AV, we remain confident that demand for our three high-end categories, ProAV, super premium Orbi 8 and 9 and 5G mobile hotspots in conjunction with an improved supply position set us up for growth in 2023”.

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