Netgear (stylized, trademarked, and marketed as NETGEAR), founded in 1996, is a US manufacturer of computer networking equipment and other computer hardware.
The company was incorporated January 8, 1996 as a subsidiary of Bay Networks, to "focus on providing networking solutions for small businesses and homes."[1] In August 1998, the company was purchased by Nortel as part of its acquisition of Bay Networks. Netgear remained a wholly owned subsidiary of Nortel until March 2000, when it began transitioning to third-party ownership. It became fully independent from Nortel as of February 2002.[2][3]
Netgear sells primarily through a sales channel network, which includes traditional retailers, online retailers, direct market resellers, value added resellers, and broadband service providers in North America, Europe, Middle East, Africa, and Asia Pacific. Its main retail competitors are Linksys and D-Link. In 2007, the United States (38% of revenue) and the United Kingdom (52%) were the company's two largest markets; however, EMEA and Asia Pacific were the fastest growing, with growth rates of 28% and 34%, respectively.
NETGEAR keeps consumers and small businesses wired and wireless. The company designs a range of networking equipment -- adapters, hubs, routers, switches, media and print servers, and interfaces -- for connecting PCs in home and small business settings to each other and the Internet. It also supplies network-attached storage (NAS) systems, VPN firewalls, and digital media receivers. NETGEAR sells through distributors, including Ingram Micro and Tech Data; to retailers such as Best Buy, Fry's Electronics, and RadioShack; and directly through its online store. The company generates more than half of its sales from international markets.
One hundred and eleven days ago our 2Wire DSL Modem Router died. It died just one day short of being five years old and it took me about a day to decide what to do about it. AT&T’s ‘store’ wasn’t going to be open until the next Monday, so I decided to go with a third-party replacement. I opted for a slightly more expensive, but faster NETGEAR Modem Router that I found at Best Buy.
I brought it home and set it up, and even though followed all the procedures, I spent most of the next two days trying to trouble shoot why some of my computers could log on and some could not. I finally called NETGEAR support and I learned that all of the computers had to have the same (lower) encryption settings of Microsoft XP operating systems to prevent the intermittent problem with each of the computers. During the call the tech requested all of my password information so he could record it.
One quick conversation with Netgear CEO Patrick Lo is all it takes to understand how this small office/home office equipment maker came to carry the NW200 title for most productive, having pulled in $1.4 million per employee in 2003. Lo is enthusiastic and energetic, passionate about changing the way people live and work.
"I would like everybody here to love coming to work everyday because they know they're participating in a mission that's revolutionary," Lo says. "We're promoting the Internet revolution around the world. We're doing something really big for mankind."
That is, Netgear is outfitting homes and small offices with some of the most advanced, easy-to-use and reliable Ethernet switches, broadband routers and wireless LAN switches available for SOHO buyers. Lo says he loves the idea that Netgear equipment is leveling the playing field for small businesses.
Lo's enthusiasm must be contagious. In 2003, Netgear reached $299 million in revenue with an employee count of 207. By comparison, Netgear's archrival Cisco generated about $583,000 in revenue per employee, according to NW200 statistics.
Netgear, No. 100 on the NW200, closely monitors revenue per employee - the amount of revenue should grow hand in hand with the number of employees, Lo says. But operating profit per employee is an important benchmark for the company, too. Netgear, which posted a $13 million profit in 2003, is positioned to achieve operating profit of $120,000 per employee for 2004, Lo says. Lo is gunning for the $160,000 mark, which just happens to be Cisco's benchmark, he says.
"In networking, everyone looks to Cisco as best in class. So if its operating profit per employee benchmark is $150,000 to $160,000, that's what we're marching toward," Lo says. "Then we'll evaluate if we can set the bar higher."
Netgear sells a line of premium NAS devices to small businesses and consumers under the product name ReadyNAS. With this storage hardware line, Netgear vies with competitors like Buffalo and HP to deliver NAS solutions to target market segments. Netgear entered the storage market in May 2007 when it acquired Infrant (originator of the ReadyNAS line).[6][7] In March 2009, Netgear began to offer an integrated online backup solution called the ReadyNAS Vault.[8][9] In November 2009, Netgear upgraded its iSCSI SAN target to LIO.[10]
Stora - A newer addition to the NAS line is the Stora line of products. Aimed to be consumer friendly, easy to set up and configure, and complemented by a software suite for user-friendly backup and storage, Stora products bring file server functionality to the home user. DLNA-certified, Stora products will serve media to DLNA devices, such as Netgear's own EVA-2000 Digital Entertainer Live, or other DLNA-compliant products such as the Western Digital WD TV Live.
We historically have used stock options as a significant component of our employee compensation program in order to align employees’
interests with the interests of our stockholders, encourage employee retention, and provide competitive compensation packages. The Financial
Accounting Standards Board has adopted changes that require companies to record a charge to earnings for employee stock option grants and
other equity incentives. As a result, we have experienced a substantial increase in compensation costs, and these charges could further
significantly impact our operating results in future periods. This could require us to reduce the availability and amount of equity incentives
provided to employees, which may make it more difficult for us to attract, retain and motivate key personnel. Moreover, if securities analysts,
institutional investors and other investors adopt financial models that include stock option expense in their primary analysis of our financial
results, our stock price could decline as a result of reliance on these models with higher expense calculations. Each of these results could
materially and adversely affect our business.
We are exposed to credit risk and fluctuations
Research and development expenses increased $9.7 million, or 52.2%, to $28.1 million for the year ended December 31, 2007, from $18.4
million for the year ended December 31, 2006. The increase was primarily due to higher salary and related payroll expenses of $4.8 million
resulting from research and development headcount growth, including $292,000 of retention bonuses for certain employees associated with the
acquisition of SkipJam Corp. (“SkipJam”) and $1.7 million related to higher headcount from the Infrant acquisition. Employee headcount
increased by 85% to 115 employees as of December 31, 2007 as compared to 62 employees as of December 31, 2006, in part due to 26
employees obtained from the acquisition of Infrant. Other employee expenses increased by $800,000 due to contractor conversions in our China
Engineering Center and recruiting costs. Rent expense increased $643,000 due to the expansion of our China Engineering Center. Furthermore,
information technology infrastructure costs allocated to research and development increased $982,000 as a result of additional investments in
software and systems in 2007 as well as relatively higher headcount which drove a higher allocation percentage to research and development.
Additionally, stock-based compensation expense increased $1.3 million to $2.4 million for the year ended December 31, 2007, from $1.1 million
for the year ended December 31, 2006.
The company was incorporated January 8, 1996 as a subsidiary of Bay Networks, to "focus on providing networking solutions for small businesses and homes."[1] In August 1998, the company was purchased by Nortel as part of its acquisition of Bay Networks. Netgear remained a wholly owned subsidiary of Nortel until March 2000, when it began transitioning to third-party ownership. It became fully independent from Nortel as of February 2002.[2][3]
Netgear sells primarily through a sales channel network, which includes traditional retailers, online retailers, direct market resellers, value added resellers, and broadband service providers in North America, Europe, Middle East, Africa, and Asia Pacific. Its main retail competitors are Linksys and D-Link. In 2007, the United States (38% of revenue) and the United Kingdom (52%) were the company's two largest markets; however, EMEA and Asia Pacific were the fastest growing, with growth rates of 28% and 34%, respectively.
NETGEAR keeps consumers and small businesses wired and wireless. The company designs a range of networking equipment -- adapters, hubs, routers, switches, media and print servers, and interfaces -- for connecting PCs in home and small business settings to each other and the Internet. It also supplies network-attached storage (NAS) systems, VPN firewalls, and digital media receivers. NETGEAR sells through distributors, including Ingram Micro and Tech Data; to retailers such as Best Buy, Fry's Electronics, and RadioShack; and directly through its online store. The company generates more than half of its sales from international markets.
One hundred and eleven days ago our 2Wire DSL Modem Router died. It died just one day short of being five years old and it took me about a day to decide what to do about it. AT&T’s ‘store’ wasn’t going to be open until the next Monday, so I decided to go with a third-party replacement. I opted for a slightly more expensive, but faster NETGEAR Modem Router that I found at Best Buy.
I brought it home and set it up, and even though followed all the procedures, I spent most of the next two days trying to trouble shoot why some of my computers could log on and some could not. I finally called NETGEAR support and I learned that all of the computers had to have the same (lower) encryption settings of Microsoft XP operating systems to prevent the intermittent problem with each of the computers. During the call the tech requested all of my password information so he could record it.
One quick conversation with Netgear CEO Patrick Lo is all it takes to understand how this small office/home office equipment maker came to carry the NW200 title for most productive, having pulled in $1.4 million per employee in 2003. Lo is enthusiastic and energetic, passionate about changing the way people live and work.
"I would like everybody here to love coming to work everyday because they know they're participating in a mission that's revolutionary," Lo says. "We're promoting the Internet revolution around the world. We're doing something really big for mankind."
That is, Netgear is outfitting homes and small offices with some of the most advanced, easy-to-use and reliable Ethernet switches, broadband routers and wireless LAN switches available for SOHO buyers. Lo says he loves the idea that Netgear equipment is leveling the playing field for small businesses.
Lo's enthusiasm must be contagious. In 2003, Netgear reached $299 million in revenue with an employee count of 207. By comparison, Netgear's archrival Cisco generated about $583,000 in revenue per employee, according to NW200 statistics.
Netgear, No. 100 on the NW200, closely monitors revenue per employee - the amount of revenue should grow hand in hand with the number of employees, Lo says. But operating profit per employee is an important benchmark for the company, too. Netgear, which posted a $13 million profit in 2003, is positioned to achieve operating profit of $120,000 per employee for 2004, Lo says. Lo is gunning for the $160,000 mark, which just happens to be Cisco's benchmark, he says.
"In networking, everyone looks to Cisco as best in class. So if its operating profit per employee benchmark is $150,000 to $160,000, that's what we're marching toward," Lo says. "Then we'll evaluate if we can set the bar higher."
Netgear sells a line of premium NAS devices to small businesses and consumers under the product name ReadyNAS. With this storage hardware line, Netgear vies with competitors like Buffalo and HP to deliver NAS solutions to target market segments. Netgear entered the storage market in May 2007 when it acquired Infrant (originator of the ReadyNAS line).[6][7] In March 2009, Netgear began to offer an integrated online backup solution called the ReadyNAS Vault.[8][9] In November 2009, Netgear upgraded its iSCSI SAN target to LIO.[10]
Stora - A newer addition to the NAS line is the Stora line of products. Aimed to be consumer friendly, easy to set up and configure, and complemented by a software suite for user-friendly backup and storage, Stora products bring file server functionality to the home user. DLNA-certified, Stora products will serve media to DLNA devices, such as Netgear's own EVA-2000 Digital Entertainer Live, or other DLNA-compliant products such as the Western Digital WD TV Live.
We historically have used stock options as a significant component of our employee compensation program in order to align employees’
interests with the interests of our stockholders, encourage employee retention, and provide competitive compensation packages. The Financial
Accounting Standards Board has adopted changes that require companies to record a charge to earnings for employee stock option grants and
other equity incentives. As a result, we have experienced a substantial increase in compensation costs, and these charges could further
significantly impact our operating results in future periods. This could require us to reduce the availability and amount of equity incentives
provided to employees, which may make it more difficult for us to attract, retain and motivate key personnel. Moreover, if securities analysts,
institutional investors and other investors adopt financial models that include stock option expense in their primary analysis of our financial
results, our stock price could decline as a result of reliance on these models with higher expense calculations. Each of these results could
materially and adversely affect our business.
We are exposed to credit risk and fluctuations
Research and development expenses increased $9.7 million, or 52.2%, to $28.1 million for the year ended December 31, 2007, from $18.4
million for the year ended December 31, 2006. The increase was primarily due to higher salary and related payroll expenses of $4.8 million
resulting from research and development headcount growth, including $292,000 of retention bonuses for certain employees associated with the
acquisition of SkipJam Corp. (“SkipJam”) and $1.7 million related to higher headcount from the Infrant acquisition. Employee headcount
increased by 85% to 115 employees as of December 31, 2007 as compared to 62 employees as of December 31, 2006, in part due to 26
employees obtained from the acquisition of Infrant. Other employee expenses increased by $800,000 due to contractor conversions in our China
Engineering Center and recruiting costs. Rent expense increased $643,000 due to the expansion of our China Engineering Center. Furthermore,
information technology infrastructure costs allocated to research and development increased $982,000 as a result of additional investments in
software and systems in 2007 as well as relatively higher headcount which drove a higher allocation percentage to research and development.
Additionally, stock-based compensation expense increased $1.3 million to $2.4 million for the year ended December 31, 2007, from $1.1 million
for the year ended December 31, 2006.
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