Breaking News

The Reason Behind Netgear's 30% Stock Increase

By Jason HopeStock MarketsJan 20, 2017 07:22PM ET's-30-stock-increase-200173084
The Reason Behind Netgear's 30% Stock Increase
By Jason Hope   |  Jan 20, 2017 07:22PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

NETGEAR Inc (NASDAQ:NTGR), the tech company based out of San Jose, CA, had an impressive fiscal 2016. Exceeding each of its quarterly revenue projections, the American global networking company ended up enjoying a net 30% stock increase for the year. The company markets its products to a variety of consumers, targeting both service providers as well as retail and commercial businesses.

The company's results have certainly made investors happy. But what exactly has been the impetus for their success? According to a company representative, there's been a high level of demand for many of their high-margin products. The market for items like their 10-gig switches, wireless security cameras, and cable gateways is continuing to grow. Although service providers still make up an important part of Netgear's customer base, much of their 2016 success has been due to their retail and commercial clients.

So then, what is the reason for the increase in demand for these types of products? In large part, it's due to a phenomenon known as the Internet of Things (IoT). It refers to the trend towards all kinds of electronic devices to becoming connected with the internet. The world is becoming a smaller place, and consumers are demanding increasing levels of connectivity with each other, as well as their devices.

Even devices that aren't traditionally thought of as being associated with internet connectivity are getting linked up and exchanging data through the internet. Ovens, microwaves, thermostats, and refrigerators are just a few examples. This increased level of connectivity obviously benefits consumers by offering greater convenience and more options. Likewise, it benefits retailers by allowing them to make better, more competitive products for their customers.

One benefit that might be slightly less obvious is the gargantuan increase in data provided to retailers and manufacturers. All major companies try to implement data-based analytics in an effort to optimize their marketing and production efforts. But the rise of the IoT has exponentially increased the availability and value of this information. Now, an oven manufacturer can have instant access telling them what temperature people prefer their potatoes baked at, which days of the week they use ovens the most or least, and which features are least used. They don't have to rely on expensive surveys, which still end up being flawed due to human error/inconsistency. The actual data is transmitted automatically.

While Netgear's 2016 results are promising, it's important to keep things in perspective. Following their last quarterly report in October, the company's stock dropped by 8%. The decline stemmed from the recently restructured service provider branch of their business. Although the most recent dip in their stock may be troubling, there's no reason to overreact. Every company has its ups and downs, but the bottom line is that Netgear's fundamentals are still solid. As long as their leadership continues to account for the IoT movement in their business model, there will continue to be a steady demand for their products in the foreseeable future.

The Reason Behind Netgear's 30% Stock Increase

Related Articles

The Reason Behind Netgear's 30% Stock Increase

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email