Netgear Posts Strong Sales, Loss For 3Q

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Netgear said strong sales of Ethernet switches for the small-business market and wireless products helped the company increase its third- quarter revenue.

Netgear, Santa Clara, Calif., reported a loss of $4 million, or 15 cents per share, on sales of $75.8 million for its third quarter ended Sept. 28. That compares with a profit of $2.3 million for the same quarter in 2002, or 12 cents per share, on sales of $64.4 million.

The company said sales increased 10 percent over the prior quarter. Ethernet switches, primarily for small businesses, grew 16 percent. while wireless products grew 25 percent.

In North America, sales grew 8 percent to 42 million, compared with $42.8 million in the second quarter of 2002. Sales were buoyant due to strong back-to-school seasonal promotions with resellers in the retail and e-commerce channels, Netgear said.

Netgear went public in July, selling 7 million shares of common stock at $14 per share. Shares closed Tuesday at $17.77, prior to the earnings announcement.

Pro forma net income, excluding changes for the impact of an extinguishment of debt charge of $5.9 million and non-cash stock-based compensation expenses, was $2.4 million, or 9 cents per share, an increase over the pro forma net income of $1.5 million, or 7 cents per share, for the same quarter in 2002.

"We continue to achieve impressive growth in profitability, notwithstanding increased marketing and tech support costs related to our higher revenue base and additional expenses related to operating as a newly public company," Jonathan Mather, Netgear's CFO, said in a statement.

Netgear said it expects revenue for the fourth quarter ending Dec. 31 to be in the range of $79 million to $81 million.

"We are entering the seasonally strong fourth quarter with high confidence in our outlook," said Patrick Lo, chairman and CEO of Netgear, in a statement. "Based on very positive initial bookings from our channel partners, we believe our current momentum will continue through the fourth quarter."

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