NetGear Reports Solid First Quarter As Public Company

"We're definitely excited with the positive reception of our IPO," Patrick Lo, chairman and chief executive officer of NetGear, networking vendor based in Santa Clara, Calif., told investors during a conference call Friday morning.

For the quarter ended June 29, 2003, NetGear reported net income of $11.5 million, or 48 cents per share, on sales of $69 million. That compares with net income of $1.8 million, or 9 cents per share, on sales of $55.5 million for the same period last year.

Included in the net income for the second quarter is a reversal of a deferred tax valuation allowance of $9.8 million, according to the company. First Call/Thompson Financial reports no analysts covering the company, but several analysts dialed into Friday's conference call.

Shares of NetGear were trading down 52 cents, at $17.50 per share in late Friday morning trading, following the release of quarterly results.

During the quarter, Lo said NetGear expanded its line of 802.11g wireless networking products for homes and a dual band 802.11a/g VPN firewall for small businesses. NetGear also recently introduced a new line of business-class wireless solutions, including an access point and antennae line with focus on higher security and expanded wireless range.

NetGear's stock received a lot of attention and was trading as much as 30 percent higher than its initial per-share offering of $14 per share just hours after its Wall Street debut July 31. Through its initial public offering, NetGear raised about $102 million net of expenses.

The company used $20 million of those proceeds to repay an outstanding note to Nortel Networks, the company from which NetGear was spun, and $17 million to repay amounts drawn on its bank line of credit, according to the company.

Debt repayment is expected to result in a pre-tax charge of about $6 million in the third quarter 2003, due to the acceleration of interest equal to the unamortized discount balance at the date of payment, according to the company.

Jonathan Mather, chief financial officer for NetGear, said given the late stage in the company's third quarter ending Sept. 30, the company would not provide additional guidance at this time.