The Corporate Restructuring Report-Netgear Inc. (NTGR) & Arlo Technologies Inc. (ARLO)
On August 7th, 2018, Netgear Inc. (Nasdaq:NTGR) will complete the carve-out of its Arlo security camera business into a separate public company, Arlo Technologies Inc. (ARLO) via an IPO. The parent will retain ~86% economic interest (or 84.2% post underwriter distribution) in Arlo. The carve-out was announced on Februay 6th, 2018 and makes sense given diverging growth profiles of the two businesses. Arlo is a high growth business vis-a-vis the remaining parent entity.
NTGR (ex-ARLO) is a leading supplier of networking products with the largest market share globally in consumer WiFi (52%) and core switches (~61%). Strong 2Q18 results driven by turnaround in connected home segment and continued solid performance of SMB segment points to topline optimism for FY2018. Robust pipeline of products should further bolster growth prospects. Increasing numbers of connected devices provides secular tailwind for NTGR's networking products.
Arlo is a play on the burgeoning connected home market, which is expected to grow at a CAGR of 34% during 2017-2021. High user engagement rate for Arlo's platform demonstrates stickiness, which in our view, should aid recurring paid subscription services revenue growth. Safety and security are the top use cases in the connected home market and Arlo's broad portfolio of security cameras positions it to tap into this growing opportunity.
Of the two, we prefer Arlo owing to more upside potential. In our view, both NTGR and ARLO are undervalued.
Arlo Technologies combines an intelligent cloud infrastructure and mobile app with a variety of smart connected devices. The company's cloud-based platform provides users with visibility, insight and a solution to help protect and connect in real-time with the people and things from any location with a Wi-Fi or a cellular connection. The company's smart connected devices include Arlo Security Camera, Arlo Q and Arlo Q Plus, Arlo Pro, Arlo Go, Arlo Baby, Arlo Pro 2, Arlo Audio Doorbell, Arlo Chime, Arlo Ultra, Arlo Pro 3 and Arlo Video Doorbell. The company's Arlo accessories include Arlo Charging Accessories, Arlo Mounts and Arlo Skins.
Netgear provides networking and Internet connected products to consumers and businesses. The company operates in the following two segments: The Connected Home, which is focused on consumers and consists of 4G/5G mobile, Wi-Fi internet networking solutions and smart devices such as Orbi Voice smart speakers and Meural digital canvas; and Small and Medium Business, which is focused on small and medium-sized businesses and consists of business networking, storage, wireless local area network and security solutions. The company is organized into the following geographic territories: Americas; Europe, Middle-East and Africa and Asia Pacific.
WhiteSand Research, LLC is a minority-owned company offering research solutions to the financial industry, including institutional investors, hedge funds, and investment firms. Founded in 2006 as a boutique research group, we focus on proprietary research reports on publicly-traded companies facing event-driven catalysts, including mergers and acquisitions, corporate buyback situations, turnarounds, spin-offs, post-bankruptcies and capital restructurings.
Producing quality, in-depth, and unbiased research to help our client's shape their investment processes has been the cornerstone of our company's success. WhiteSand Research employs a value-oriented, event-driven investment strategy that seeks to capitalize on the most inefficient and attractive investment opportunities.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.