Lehman Brothers' networking and wireline equipment analyst Jiong Shao released a note to clients summarizing his investment conclusions from new products shows at CES last week. Key excerpts on Netgear (NTGR) and Scientific Atlanta (owned by CSCO):
we are particularly impressed by Netgear's product leadership for having industry unique devices such as StorageCentral and the Skype phone, as well as the overall sleek design of Netgear's products.
* NTGR: Expect strong new product sales momentum to cont. w/ RangeMax and StorageCentral.
* NTGR: Growth in '06 to be fueled by wireless routers, including RangeMax family, particularly RangeMax 240, StorageCentral & new Skype phone.
* NTGR: Possible upside from VoIP initiatives in '06 as SoHo VoIP should gain traction throughout the year.
* NTGR: We cont. to bel. NTGR on track to at least meet our Dec-Q rev/EPS ests. of $126.9M/$0.28 and we maint. our 1-0W rating and $25 price target ( 17x CY06 EPS of $1.18 + $4.67 cash/share).
* Scientific Atlanta: Noted three core competencies of SA: digital encoding capability, network management systems, and its professional services (site care).
* Scientific Atlanta: In win at SBC, SA chosen to build 2 SHOs and 41 VHOs. So far, has completed 1 SHO and almost completed 4 VHOs for SBC.
* Scientific Atlanta: IP set-top boxes may start to ship to SBC over next couple of months.
NTGR 1-yr chart: