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Netgear (NTGR) Bharath Chandrashekhar Daniel Kleeman Shalini Sivarajah Presented: April 10, 2014.

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Presentation on theme: "Netgear (NTGR) Bharath Chandrashekhar Daniel Kleeman Shalini Sivarajah Presented: April 10, 2014."— Presentation transcript:

1 Netgear (NTGR) Bharath Chandrashekhar Daniel Kleeman Shalini Sivarajah Presented: April 10, 2014

2 Agenda Company Profile Business Model SWOT Analysis Macroeconomic Overview Stock Performance Porter’s Analysis Comps Analysis Financial Analysis Valuation Recommendation

3 Company Profile Netgear is a global networking company, engaged in providing a range of networking products to consumers, businesses and service providers The company operates in US, EMEA (Europe, Middle-East and Africa) and Asia Incorporated: January 1996 HQ: San Jose, CA IPO: July 2003, raised $98m Market Cap: $1.2bn Current Share Price(4/8/14): $33.45

4 Business Model Outsource manufacturing, warehousing and distribution Focus mainly on sales & marketing and R&D Distribution is mainly through traditional retailers, online retailers, wholesale distributors, DMR and VARs Three business segments: ▫Retail ▫Commercial ▫Service Provider Little to no debt 150 issued United States and 80 foreign patents that expire between 2014 and 2030 Approximately 125 pending United States and foreign patent applications

5 Business Segmentation Business Segments RetailCommercialService Provider WiFi Internet Routers WiFi Network Adapters WiFi Range Extenders Network Powerline Products Home Monitoring Cameras Multimedia Streaming Devices Home Use Network Storage Switches and Access Points Mobile Broadband Routers DSL and Cable Gateways Unified Network Storage Systems WiFi Networking Products Network Management Tools Network Security Mobile Broadband Devices WiFi Routers DOCSIS 3.0 Gateways xDSL and Fiber Gateways Powerline and MoCA Adapters WiFi Adapters Storage Switches Home Security Network Security

6 Retail Networking Retail Share Wifi Range Extender DSL Modem Router USB Mini AdapterWifi Router Source: Analyst Day 2013 Presentation

7 Commercial Backup Storage Switches Wifi Networking Router

8 Service Provider

9 Business Segments

10 Geographic Segments Revenue Breakdown

11 SWOT Analysis STRENGTHS -Continuous R&D focus -Low debt WEAKNESSES -Exposed to Foreign Exchange Rate Risk -Increased cost of production in China OPPORTUNITIES -EMEA after consolidation (one of the best distribution networks in Europe) -Aircard acquisition implementation THREATS -New Technology by competitors -Imports from China SWOT Analysis

12 Macroeconomic Overview Key Drivers ▫Demand from wired Telecommunications operators ▫Number of broadband connections ▫Corporate profit ▫Aggregate private investments- expected to increase by 5.1% in the above period

13 Stock Performance NASD NTGR Source: Yahoo Finance

14 Porter’s 5 Forces Industry Landscape /Competition MEDIUM- HIGH Bargaining Power of Suppliers MEDIUM Threat of Substitutes LOW Threat of New Entrants MEDIUM Bargaining Power of Buyers HIGH 14

15 Competitive Space

16 Comparable Companies

17 Valuation – Comparable Companies

18 Financial Analysis

19 Business Performance

20 Revenue Analysis

21 Valuation – Discount Rate

22 Valuation – DCF

23 Recommendation Current Price – $34.04 DCF Value – $17.44 Comps Value – $20.54 - $34.34 Recommendation: No change, keep on watch list

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