Netgear Looks to Reverse Wi-Fi Router Slowdown With Wi-Fi 6; Stock Down After Q1
Netgear is looking to Wi-Fi 6 to reverse declines in its 802.11ac router business, said CEO Patrick Lo on a Wednesday Q1 call. Shares closed down Thursday 15 percent at $29.68. Revenue dropped 7.5 percent to $249.1 million on sagging…
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consumer sales after the holiday season and reduced service provider sales in North America. In the U.S., retail Wi-Fi sales dropped 8 percent year on year, Lo said. Two major service providers scaled back demand for 4G mobile hot spots and are balancing inventory in preparation for the 5G rollout, he said. Netgear predicts Q2 service provider revenue will be down $13 million from Q1 due to seasonality and the “Wi-Fi market slowdown,” said Chief Financial Officer Bryan Murray. The company projected Q2 revenue to be $215 million-$230 million. Deceleration in the 802.11ac router market at a higher-than-expected rate poses “significant risk” to second-half growth, said Lo. Netgear leads the U.S. Wi-Fi market with 50 percent share, he said. Growth in mesh products and gaming routers couldn't offset the decline in 11ac routers in Q1: “It’s up to us to reverse this trend,” he said, by “stimulating demand with new technology.” The company plans to refresh its entire line of the 11ac routers with Wi-Fi 6 “at all price points” in the second half, he said. The gearmaker “aggressively introduced” new Wi-Fi 6 routers at the end of Q1, Lo said. It's looking to 4K broadcasts of the 2020 Olympics from Tokyo to accelerate the global transition from 1080p to 4K.