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Netgear To Be Split Up, New Arlo Company

Arlo which has been one of the success stories for Netgear is set to spin the brand out into a separate business with its own CEO.

The move comes as Netgear who have been under pressure in Australia resulting in extensive budget cuts reports a 7.9% increase in global revenues for the quarter to US$397 million.

Arlo products were responsible for generating Q4 revenues of $128.5 million, up from $76.97 million in the year-ago period. By comparison its connected home segment pulled down revenues of $198.7 million, down from $214.93 million a year earlier.

Overnight Netgear said its board has approved a plan to separate its Arlo business, a growing unit that currently focuses on security cameras and subscription services, through an initial public offering that’s expected to be completed in the second half of 2018.

Netgear, which battles with companies such as Nest at retail, expects Arlo to issue less than 20 percent of its common stock in the IPO, with Netgear to retain the remaining interest. Following the IPO, however, Netgear expects that it will distribute the shares of Arlo common stock then held by Netgear to its stockholder.

A unit called Arlo Technologies will hold the Arlo business.

Netgear also announced that it expects Matthew McRae to serve as Arlo’s CEO. McRae, the former chief technology officer and head of marketing at Vizio, joined Netgear about four months ago as SVP of strategy.

Arlo makes a line-up of wireless and mobile security cameras and subscription plans for home and business users.

In addition to a free basic home offering that includes seven days of cloud recordings and support for up to five cameras, Arlo also includes subscription plans, including a $99 per year Premier plan with 30 days of cloud recordings and support up to ten cameras, and a higher-end plan that runs $149 per year with 60 days of cloud recordings. Arlo’s subscription plans start as low as $129 per year on up to $499 per year.

Netgear announced the Arlo spin-off plan as it issued Q4 results. Results at Arlo were a bright spot in the quarter.

Netgear said consolidated revenues for the period were $397.1 million, up 7.9 percent, with a GAAP net loss per diluted share of $1.02.

With net revenue broken down by segment, Netgear’s Arlo unit generated Q4 revenues of $128.5 million, up from $76.97 million in the year-ago period. By comparison its connected home segment pulled down revenues of $198.7 million, down from $214.93 million a year earlier.

In Australia Netgear management have not returned our calls.

What we want to asertain is whether current Netgear staff will be moved into the new Company. What impact will the loss of Arlo revenue have on Netgear Australia revenues or whether the sale of Netgear b2b and consumer routers and modems will be switched to a distributor model while staff concentrate on growing the Arlo business.

Recently Netgear Australia slashed budgets after Google launched their local network and Wi Fi offering a move that stripped market share away from Netgear.

 

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