Netgear Jumps on IPO Bandwagon

Netgear Inc. is the latest computer networking
equipment company to go public.

The Santa Clara, Calif.-based company makes a variety of networking
products that allow small businesses, home-offices and consumers the
ability to share Internet access among several personal computers.

Like the previous high tech offerings from iPass and InterVideo, Netgear saw its stock pop higher when it finally opened for trading.

In a press release issued Thursday morning, the company said it priced its initial public offering of seven million shares at $14 per share raising net proceeds of approximately $98 million. On Wednesday, the expected price range of the shares were raised to $12-$14 from a previous level of $10-$12.

Lehman Brothers is the lead underwriter, while Merrill Lynch and UBS are
acting as co-managers of the Netgear IPO.

The initial sale of shares is expected to give Netgear market value of close
to $381 million, which is based on the 27.2 million shares that will be
outstanding, according to Netgear’s Securities and Exchange Commission
filing.

“The Company has granted, to the underwriters, a 30-day option to purchase
an additional 1,050,000 shares at the initial public offering price to cover
over-allotments, if any,” Netgear said.

According to an Netgear’s amended S-1 form filed with the SEC, the company
said it plans to use $20 million of the proceeds from the IPO to repay debt
to Nortel Networks , the Canadian networking
communications company.

NETGEAR has a “suite of approximately 100 products enables users to share
Internet access, peripherals, files, digital multimedia content and
applications among multiple personal computers and other Internet-enabled
devices,” according to the company’s press release.

On July 28, Renaissance Capital issued a research note and commentary on the
Netgear IPO

“Netgear started out as a networking products vendor but quickly expanded
into the broadband market. It has since ramped up its research and
development staff, successfully introduced new products and built a strong
brand name. Today, the firm offers more than 100 ethernet, broadband and
wireless networking products worldwide. Its small-business products are
distributed primarily through value-added and direct-market resellers, such
as CDW and Insight. Home users find the brand in
traditional retail stores, such as Best Buy , Circuit City
and CompUSA, as well as online vendors, including
Amazon.com .”

“Demand for networking products in the small- and home-business market is
driven by an increasing number of PCs and the need to deploy networks that
enable users to share peripheral devices and allow them to access data and
the Internet. It is estimated that, to date, network penetration among firms
with less than 100 employees is only 32 percent, which leaves plenty of room
for growth,” Rennaisance Capital said.

Rennaisance Capital goes onto say “according to market data provided by IDC,
the number of DSL and cable modem Internet connections is estimated to grow
at a compound annual growth rate of 33 percent through 2006. In the wireless
arena, product sales are driven by users’ increasing need to access networks
from outside the home or office, for example in airports or universities.
According to Cahner’s In-Stat/MDR estimates, shipments of local area network
equipment will grow 42 percent per year through 2006.”

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