Thursday, February 6th 2014

NETGEAR Reports Fourth Quarter and Full Year 2013 Results

NETGEAR, Inc. (NASDAQ: 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, 2013.

Net revenue for the fourth quarter ended December 31, 2013 was $356.6 million, as compared to $310.4 million for the fourth quarter ended December 31, 2012, and $361.9 million in the third quarter ended September 29, 2013. Net income, computed in accordance with GAAP, for the fourth quarter of 2013 was $11.4 million, or $0.30 per diluted share. This compared to GAAP net income of $16.1 million, or $0.41 per diluted share, for the fourth quarter of 2012, and GAAP net income of $14.5 million, or $0.37 per diluted share, in the third quarter of 2013.

Gross margin on a non-GAAP basis in the fourth quarter of 2013 was 29.2%, as compared to 30.0% in the year ago comparable quarter, and 28.9% in the third quarter of 2013. Non-GAAP operating margin was 10.6% in the fourth quarter of 2013, as compared to 11.4% in the fourth quarter of 2012, and 9.9% in the third quarter of 2013. Non-GAAP net income was $0.59 per diluted share in the fourth quarter of 2013, as compared to non-GAAP net income of $0.55 per diluted share in the fourth quarter of 2012, and non-GAAP net income of $0.58 per diluted share in the third quarter of 2013.

Our non-GAAP tax rate was 39.6% in the fourth quarter 2013, as compared to 39.4% in the fourth quarter of 2012, and 37.2% in the third quarter of 2013.
Net revenue for the full year 2013 was $1.37 billion, a 7.7% increase as compared to $1.27 billion for 2012. Non-GAAP income from operations for the full year 2013 was $139.9 million, as compared to non-GAAP income from operations of $147.7 million for the full year 2012. Net income, computed in accordance with GAAP, for 2013 was $55.2 million, or $1.42 per diluted share. This net income was a 36.2% decrease compared to net income of $86.5 million for 2012. Earnings per share, computed in accordance with GAAP, was $2.23 per diluted share for the full year 2012.

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 and other charges, acquisition-related expense, impact to cost of sales from acquisition accounting adjustments to inventory, gain on sale of cost method investment, impairment charges, 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.

"Fiscal 2013 was an important year for NETGEAR, highlighted by our acquisition of the AirCard team from Sierra Wireless, our ground breaking product launch of the Nighthawk 802.11ac router, the refresh of our entire ReadyNAS storage line for the Commercial Business Unit, and our introduction of the world's fastest 4G LTE mobile hotspots," said Patrick Lo, Chairman and CEO of NETGEAR. "In 2014 we plan to maintain our position as the market leader in WiFi routers and extenders, 4G LTE Advanced mobile hotspots and gateways, bonded channel cable and xDSL gateways, 10Gig switches, and enterprise class SMB storage."

Christine Gorjanc, Chief Financial Officer of NETGEAR, added, "Leveraging our strong balance sheet and working capital management, we repurchased over $63 million of NETGEAR common stock, about 2 million shares, on the open market during the fourth quarter, with an average price of $31.47 per share, resulting in a $0.02 per share benefit to non-GAAP diluted earnings per share for the fourth quarter. This leaves approximately 2.8 million shares remaining in our open buyback program under which we are continuing to repurchase shares in a disciplined manner."

Mr. Lo continued, "For the first quarter of 2014, we are expecting revenue to be in the range of approximately $335 million to $350 million and non-GAAP operating margin to be in the range of 9% to 10%."
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