Lehman Brothers: Netgear 'Particularly Impressive' At CES (NTGR, CSCO)

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.

SUMMARY BULLETS:

* 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: