Netgear Tanks As Stock Issues Become Major Problem
Netgear Australia have gone remarkably quiet after their launch last year of a new premium priced range of W6 routers, now the Company’s shares are tumbling, 17% this year, after disappointing sales forecasts, with questions being asked about supply and future sales.
In comparison archrival D-Link has launched several new routers, security cameras and new B2B network gear.
The US networking Company has seen their stock fall 17% this year, they also own a major share in security camera business Arlo.
The fall in share value has happened despite Netgear reporting sales of US$308.8 million in the second quarter 2021, this was an increase of just over 10% from the year-ago quarter.
The problem is that investors are not happy with the company’s third-quarter outlook.
The business has set revenue guidance between US$285 million to US$300 million, which represents a 20% decrease year over year, at the high end of guidance.
Netgear’s CFO, Bryan Murray said last month “While we are confident in our ability to provide guidance at this time, we do so with the caveat that, while conditions are improving, considerable uncertainty remains in the market due to the COVID-19 pandemic and, should unforeseen events occur, in particular challenges related to closure of our manufacturing partners operations or transportation delays into any of our regional distribution centres, our actual results could differ from the foregoing guidance,” Murray said.
Patrick Lo, Netgear’s chairman and chief executive, said during a recent conference call. “Worldwide supply chain constraints, however, such as component shortages, increased freight costs and transit times, and factory closures due to COVID-19, led to a perfect storm of factors that held back our revenue number and saw us fall short of our operating margin goals,”
ChannelNews understands that Netgear is having major problems securing processors for their products while also struggling to get stock in transit into retail stores in Australia.
On the plus side Netgear’s debt is low — only 5% of the company’s net worth.
It has been profitable in 14 of the past 15 years, but profits are rarely outstanding.
That’s why the price-to-sales ratio is only 0.88. Because it’s a relatively small company, only three Wall Street analysts follow Netgear.
Two call it a “buy,” one a “hold.”.