Netgear the high-priced consumer networking Company is seriously struggling, with the business reporting losses and falling sales, in the last quarter ending March 31st 2024, revenue fell 9% to US$164.59 million from a year ago losses came in at of $18.65 million.since 2021 their share value has fallen from US43 to just $11.58 today with their Asia Pacific operation of which Australia makes up the bulk of the revenue, reporting Connected Home sales of $9.95 million and $13.5M in the B2B market during the past quarter. This was down on the prior quarter.
Last week the business that has started killing off poor performing products including their Meural digital picture frame but are still facing stock problems in the Channel due to retail and B2B partners only carrying the minimum level of stock.
The CEO of the business, CJ Prober, claims the challenging macroeconomic environment coupled with continued high inflation and interest rates are pressuring their channel partners to drive inventory to historical lows across Netgear’s consumer and B2B businesses.
“While we have been working to bring down channel inventories, this higher level of destocking combined with a mix shift from our premium consumer products to our service provider products and a slightly more promotional retail market, unfavourably impacted our profitability in the first quarter.”
Co-founder and Chief Executive Officer Patrick Lo appears to have an ongoing struggling to hit any of the targets he outlined to journalists before COVID.
At one stage they were targeting a 45 percent market share in home mesh Wi Fi but that was before several Chinese networking brands such as TP Link and Taiwanese Company D Link started to strip share with similar products that were cheaper in the consumer market.
In Australia Netgear has reduced channel stock levels from 10 weeks to eight.
Globally the business slashed US$10 million from their marketing budgets.
Bryan Murray, Chief Financial Officer at Netgear claimed “We continued to make progress in reducing our own inventory levels, which were down $37.6 million in the first quarter, and we continue to drive towards our desired level of three months of supply.
He added, “We expect to accelerate our way through NFB and CHP destocking activities within the second quarter. We expect this effort to represent a headwind of between $25 million to $30 million to our Q2 topline”.
Revenue from the service provider channel is expected to be approximately $15 million in the second quarter as our partners await our next generation 5G The Company expect second quarter net revenue to be in the range of $125 million to $140 million which is lower than the last quarter’s revenue.
He concluded “We expect we will be back to our historically normal inventory costs after we reach our target inventory levels of three months. We are also taking more aggressive action to consume some of our slower moving products in an accelerated fashion which will put pressure on our Q2 margins”.
ChannelNews understands that retailers are being offered higher incentives to shift Netgear stock.
