NETGEAR Inc. (NTGR - Free Report) recently augmented its product portfolio by introducing a new series of switches that are specifically designed for the growing audio video over IP (AV over IP) market. The freshly launched M4250 breed of switches are likely to enhance the experience of audio-video professionals by including a new user interface designed from the ground up, thereby strengthening NETGEAR’s leading position in the market.
The audio-video interface in the M4250 switches offer the common AV controls at the front with user-selectable profiles for common AV platforms in order to ensure that settings are correct for a specific audio or video application. In addition, the switches support advanced configuration for various types of other installations along with networking features like static, RIP and PIM routing, DHCP server and PTPv2.
The switches offer full support for Audio Video Bridging — an industry standard for transporting content over a low latency network that is often used in live performances for perfect lip sync. They are designed for seamless integration with traditional rack-mounted AV equipment with additional options for mounting outside the rack available with universal, threaded holes located on the bottom and the front of each switch.
Moving forward, NETGEAR intends to remain quite proactive with its broad line-up of avant-garde switching solutions. These solutions cater to a wide range of customers related to education, hospitality and retail sectors. Markedly, its top line is benefiting from rapid surge in Internet devices and boosting the need for robust networking solutions. Higher market demand for Smart Home and connected products such as Smart TVs, HD streaming players and security cameras, among others, continues to drive innovation in the networking space.
Holding nearly 49% of the U.S. retail switch market, the company is gaining from the healthy market traction of Orbi, cable modems and gateways coupled with its SMB switching portfolio, particularly the PoE and ProAV switches. It continues to capitalize on technology inflections, create new categories and build recurring revenues to maintain its market position and drive growth. The latest addition to the switches portfolio is likely to fortify its market position and augment revenues in the near term.
However, the company functions in a rapidly evolving and fiercely competitive market and expects competition to intensify on price. Furthermore, it depends on a limited number of third-party manufacturers for substantially all of its manufacturing needs, primarily based in low-cost countries like China and Vietnam. With potential trade restrictions on China, NETGEAR is likely to lose its cost advantage, and products can become pricier. The company’s business is also highly seasonal. It experiences increased sales in the third and fourth fiscal quarters, primarily due to seasonal demand from consumer markets relating to the beginning of the school year and holiday season. This leads to volatility in cash flow and reduces the predictability of earnings.
Shares of NETGEAR have lost 3.7% compared with the industry’s decline of 17.7% in the past year.
Nevertheless, we remain impressed with the inherent growth potential of this Zacks Rank #3 (Hold) stock. Some better-ranked stocks in the industry are Digi International Inc. (DGII - Free Report) , Extreme Networks, Inc. (EXTR - Free Report) and RADCOM Ltd. (RDCM - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Digi International delivered a trailing four-quarter positive earnings surprise of 564.3%, on average.
Extreme Networks delivered a trailing four-quarter positive earnings surprise of 223.2%, on average.
RADCOM delivered a trailing four-quarter positive earnings surprise of 21.9%, on average.
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