Netgear, a leading provider of Wi-Fi systems, routers, and switches, experienced a decline in its stock value after issuing lower-than-expected revenue guidance for the first quarter. The company's Chief Financial Officer, Bryan Murray, also expressed concern regarding higher inventory costs.
Declining Revenue and Higher Inventory Costs
Shares of Netgear fell by 10% to $12.85 during midday trading, a significant drop compared to $19.39 a year ago. Netgear attributed the anticipated decrease in revenue to a seasonal decline in its connected-home products business following the holiday season. In addition, the company highlighted that high interest rates are impacting the inventories of the small- and medium-sized businesses it serves.
Diminished Expectations for Current Quarter
Netgear's revenue projections for the current quarter range between $155 million and $170 million, falling short of the $171.7 million forecasted by analysts polled by FactSet. This outlook suggests ongoing challenges for the company in the near term.
Inventory Management Strategies
As part of its efforts to improve inventory management, Netgear is actively reducing its own inventory levels. However, this decision has led to the company consuming higher-cost inventory. CFO Bryan Murray clarified that in the second half of the year, Netgear expects to return to normal inventory costs.
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