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Transcript of NETGEAR
GDP: North America v. Europe
Devices : People Ratio
Networks as a commodity
Energy Star Partner
Bargaining Power of Suppliers
Only a few suppliers
Threat of New Entrants
Steep learning curve
Threat of Substitutes
Networking as a commodity
Bargaining Power of Consumers
Commodity & service offerings
Similarities - competition & offerings
Porter's Five Forces
Size advantage (~74,000)
Similar product offerings
40% intangible assets
Size (~96,000 employees)
Focus on hard drives
Revenue stream (APAC)
Majority of yearly revenue
Key Concerns & Evaluation
How do we expand our "cloud" computing service offering?
How can we increase our commercial product offering?
How do we optimize our management to extend our reach to different markets and demographics?
LogMeIn Acquisition Financial Analysis
Grand Strategy Matrix
Substantial Competitive Advantage
Growing Market Opportunities
Follows close behind, industry leader
Hard drive disk advantage
More focused product offerings
At Netgear, our ability to combine our strong competitive advantage and an industry with high growth opportunities leads us to pursue a competitive strategy implementation.
Patrick Lo, 1995
Latin American Headquarters
Company Profile, Pt. 2:
Based in San Jose, CA
National & International Presence
Goal: Preferred, customer-driven networking technology provider
“At NETGEAR, we turn ideas into innovative networking products that connect people, power businesses, and advance the way we live. Easy to use. Powerful. Smart. And designed just for you.”
“Our goal is to be the leading provider of innovative networking products to the consumer, business, and service provider markets”
Who We Are
devices that are
easier to operate
than comparable products
Reduced labor costs
business units and
and distribution platform
Great responsibility resting on CEO Patrick Lo - no successor has been groomed
Low R&D funding
On average, most companies spend 5-15% of revenue
Competitors spend 8-12% while NETGEAR spends 4.8%
Rely few manufacturers
: automatic, all-in-one router with backup capabilities for PCs and Macs
Ratio of devices to people is rapidly growing
People need higher performance network connectivity devices
Competitors do not dominate European
Capitalize on European recovery in the future
Expand customer base in growing technology hubs
: Europe (Budapest), Boston, Mexico
Consumers view networking products as “
Tablet usage increasing
All supplies come from a few manufacturers
and some of whom
also produce products for competitors
struggling to compete with online retailers
--> Best Buy accounts for 10% of our revenues
gives company an
edge over competitors
Large global footprint with offices in over
across the globe
Price & Promotion
Competitive pricing model
with promotional cash-back
Challenging to hold our competitive advantage because many people perceive our products as “commodities”
Enable network connectivity, broadband access and networking
Innovative product line features:
wired and wireless devices
: provide streaming, game adapters, and screen mirroring
: Prosafe and Home Video Monitoring
available to fit customer needs
More connected devices than people in the world
Broad range of clientele
Provide communications, information, entertainment, sales, education and more
Energy Star Partner
Partnership coincides with our
, while serving as a
grows with our customers
needs and values
Innovatively continue to advance the way we live
Further develop the CentriaTM’s capabilities and brand image.
Develop a Latin American headquarters in Mexico City.
Remain aware of the costs and risks associated.
After the acquisition:
Retain the technological skills and talent from LogMeIn
Minor changes to the acquired offices to keep company culture consistent
CentriaTM is new, so no broad brand image has been created.
Need to carefully market to efficiently capitalize.
Mexico City as the first primary Latin American office.
Mexico City has an emerging tech market and proximity to the United States.
Cost and travel time reduced.
If successful, expansion further south.
Latin American HQ
The CentriaTM is a two-in-one router and backup system.
Further R&D from LogMeIn.
USB vs. Firewire.
Marketing campaign to capitalize on iCloud’s hacking problem.
LogMeIn is a Hungarian company founded in 2003.
Specializes in cloud computing and remote desktop operations.
Allows us to begin operations in Budapest and Boston.
Break up the “Americas” segment.
Allowing a greater focus on specialized locations vs. a broad approach.
A Mexico City location already exists.
Mexico’s emerging tech market.
Could be the primary point for all initial Latin American operations.
Impact of Acquisition of Aircard:
NETGEAR’s net revenue jumped from $293 million (FY-2013Q1) to $358 million (FY-2013Q2)
Latin American HQ - Financial Analysis
Goal: become a multi-billion dollar company
Total Assets: $1.093 billion in 2013 from $1.034 billion in 2012
Total Stockholder Equity: $773 million by December 2013 (improvement from 2012)
(FY 2013 Q3)
(FY 2013 Q3)
Service Provider $155 million
Americas’ Strong Regional Standing
In the Americas, there was a jump in net revenues from $201 million (FY-2013Q2) to $220 million (FY-2013Q3) in a single quarter
Mexico’s Information Technology Potential
“Mexico is quietly emerging as a capital of Latin America’s growing information technology (IT) outsourcing industry”
Already supports outsourcing for established technology brands such as Xerox, Softek, HP, IBM, and Intel
Retail $130 million
Commercial $77 million
NETGEAR’s weakening commercial segment
NETGEAR’s revenues for the company’s commercial segment fell from $88 million (FY-2013Q2) to $77 million (FY-2013Q3)
LogMeIn’s Unstable Financial Standing
At the end of 2013, LogMeIn closed with a negative change in cash and cash equivalents—including negative total cash flows from both investing and financing activities
Dramatic drop in net income from $3.566 million in 2012 to (-$7.682) million in 2013
Research & Development Expenses
Both NETGEAR and LogMeIn have increased their research and development expenses
Americas $155 million
APAC $44 million
EMEA $97 million
Integrate talent and resources
Develop marketing campaign
Creating marketing collateral and resources
Leverage LogMeIn for marketing campaign
Transform office from solely sales into sales and R&D
Utilize Boston and Budapest space
Evaluate current campaign
Strengthen campaign's performance capabilities
Conduct research for Latin American markets
Develop and improve products and services
Optimize LogMeIn talent for upper management recruiting
Continue evaluating and procede with campaign
Evaluate previous research and employ strategies to enter new markets