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Netgear (NTGR)

Netgear (NTGR). Bharath Chandrashekhar Daniel Kleeman Shalini Sivarajah Presented: April 10, 2014. Agenda. Company Profile Business Model SWOT Analysis Macroeconomic Overview Stock Performance Porter’s Analysis Comps Analysis Financial Analysis Valuation Recommendation.

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Netgear (NTGR)

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  1. Netgear (NTGR) BharathChandrashekhar 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 • WiFi Internet Routers • WiFiNetwork Adapters WiFiRange Extenders Network PowerlineProducts • 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 • WiFiNetworking 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 Source: Analyst Day 2013 Presentation Wifi Router USB Mini Adapter Wifi Range Extender DSL Modem Router

  7. Commercial Switches Backup Storage Wifi Networking Router

  8. Service Provider

  9. Business Segments

  10. Geographic Segments Revenue Breakdown

  11. 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

  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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