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NETGEAR, Inc (NTGR)
Q2 2009 Earnings Call
July 22, 2009 5:00 pm ET
Joseph Vitalta - Investor Relations, The Ruth Group
Patrick Lo - Chairman and CEO
Christine Gorjanc - CFO
Jeff Kvaal - Barclays Capital
Hamed Khorsand - BWS Financial
Sanjit Singh - Wedbush Morgan Securities
Previous Statements by NTGR
» NETGEAR, Inc. Q3 2009 Earnings Call Transcript
» Netgear Inc. Q1 2009 Earnings Call Transcript
» NETGEAR, Inc. Q4 2008 Earnings Call Transcript
It is now my pleasure to introduce your host, Joseph Vitalta of The Ruth Group. Thank you. You may begin.
Thank you, operator. Good afternoon and welcome to NETGEAR's second quarter 2009 results call. Joining us from the company are Mr. Patrick Lo, Chairman and Chief Executive Officer and Ms. Christine Gorjanc, Chief Financial Officer. The format of the call will be a brief business review by Patrick, followed by Christy providing detail on the financials. We'll then have time for any questions.
If you have not received a copy of today's earnings release please call The Ruth Group at 646-536-7003 or you can go to NETGEAR's corporate website at www.netgear.com. Before we begin the formal remarks, the company's attorneys advise us that today's conference call contains forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995. The words anticipate, expect, believe, will, may, should, estimate, project, outlook, forecast or other similar words are used to identify such forward-looking statements. However, the absence of these words does not mean the statements are not forward-looking.
Forward-looking statements represent NETGEAR Inc.'s expectations or beliefs concerning future events based on information available at the time, such statements were made and include statements among others regarding NETGEAR's expected revenue, earnings, growth and operating income and tax rate on both a GAAP and non-GAAP basis.
The effect of the global economic environment on the company's business, our position in the market relative to our competition, the long-term future of NETGEAR's business, our ability to innovate anticipated new product offerings, current and future demand for the company's existing and anticipated new products, willingness of the consumers to purchase and use the company's products and the ability to increase distribution and market share for the company's products domestically and worldwide and the effects of the company's restatement of financial statements.
These statements are based on management's current expectations and are subject to certain risks and uncertainties including without limitation the following: Future demands for the company's products may be lower than anticipated. Consumers may choose not to adopt the company's new product offerings or adopt competing products. Product performance may be adversely affected by real world operating conditions; the company may be unsuccessful or experience delays in manufacturing and distributing its new and existing products.
Telecommunication service providers may choose to slow their deployment of the company's products or utilize competing products. The company may be unable to collect receivables as they become due, the company may fail to manage costs including the cost of developing new products, and manufacturing and distribution of its existing offerings.
Channel inventory information reported is estimated based on the average number of weeks of inventory on hand on the last Saturday of the quarter. As reported by certain of NETGEAR's customers, changes in the level of NETGEAR's cash resources ands the company planned usage of such resources, changes in the company's stock price, developments in the business that could increase the company's cash needs and fluctuations in further and foreign exchange rates.
Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements.
Further information on potential risk factors are detailed in the company's periodic filings with the SEC, including but not limited to those risks and uncertainties listed in the section entitled, Part 2, Item 1A, risk factors, pages 29 to 43 in the company's quarterly report on Form 10-Q for the quarter ended March 29, 2009, filed with the Securities Exchange Commission on May 7, 2009.
NETGEAR undertakes no obligation to release publicly any revisions to any forward-looking statements contained herein to reflect events or circumstances after the date hereof or if they reflect the occurrence of unanticipated events. In addition, several non-GAAP financial measures will be mentioned on this call. Information related to the corresponding GAAP measures and reconciliation of the non-GAAP and GAAP measures can be found in our press release in the Investor Relations site at www.netgear.com.
At this time, I would now like to turn the call over to Mr. Patrick Lo.
Thank you, Joseph. Thank you everyone for joining today's call. In the seasonally slow second quarter, we made further significant progress in our business among the few challenging macroeconomic environment. We achieved a $144.7 million of revenue at the high end of our prior guidance. We reduced our on-hand inventory sequentially by 18% to $75 million.
Cumulatively, we have reduced our on-hand inventory by 40% over the last three quarters increasing our inventory turns from 3.7 to 5.5. We were also successful in reducing channel inventory among our distributors worldwide, bringing them all in line with our four to five weeks target. We generated significant cash from our operations in Q2, 2009, increasing our cash and cash equivalents by $224 million to over $224 million while bringing our DSO down to 69 days.