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: Netgear stock drops more than 10% amid sales slump, China COVID lockdowns

Netgear Inc. shares dropped more than 10% in the extended session Monday after the network equipment and router company cut its outlook citing a drop in consumer sales and supply-chain problems from COVID lockdowns in China.

Netgear
NTGR,
+2.62%

shares were last down 13% after hours, following a 2.6% rise to close the regular session at $23.14. As of Monday’s close, shares are down 41% over the past 12 months, versus a 4.9% gain in the S&P 500 Index
SPX,
-0.02%
.

After the close of markets, the company said it was cutting forecast fiscal first-quarter revenue to between $202 million and $212 million, from a previous range of $225 million to $240 million.

Analysts surveyed by FactSet had estimated revenue of $231.6 million based on that previous forecast.

“The U.S. consumer WiFi market, which had exited 2021 at approximately 15% above 2019 levels, declined in the first quarter of 2022, ending roughly flat to 2019 levels,” the company said in a statement. “The decline in market size negatively impacted the performance of our [connected home products] business which saw a decline in revenue relative to our expectations earlier in the quarter.”

“Despite [small-to-medium-sized business] revenue performance meeting expectations, supply of components to our factories were severely disrupted in March due to COVID-induced lockdowns in Shenzhen, resulting in a meaningful lost opportunity to deliver higher SMB revenue in the quarter.”

Netgear has been citing supply-chain problems as hampering its business since last year, a widespread problem among electronics manufacturers as a global chip shortage persists.

Netgear is scheduled to report quarterly results on April 27.

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