Welcome to the Netgear Incorporated Fourth Quarter 2007 Results Conference Call.
It is now my pleasure to introduce to your host Mr. Joseph Villalta of The Ruth Group, thank you, you may begin.
Welcome to Netgear’s Fourth Quarter 2007 Results Call. Joining us from the company is Patrick Lo, Chairman and Chief Executive Officer and Christine Gorjance, Chief Financial Officer. Format of the call will be a brief business review by Patrick Lo followed by Christine providing detail on the financials. We will then have time for any questions. If you have not received a copy of this day’s earnings please call the Ruth Group at 646-536-7026 or over the Netgear’s corporate website at www.neatgear.com.
Before we begin the formal remarks, the company’s attorney’s advice of today’s conference call contains forward looking statements within the meeting of the US Private Securities Regulation Reform Act of 1995.
The forward looking statements represents Netgear Inc’s expectations or beliefs concerning future events and including statements among others regarding Netgear’s expected revenue, earnings, operating income, and tax rate on both the GAAP and none GAAP basis. Anticipated new product offerings, current and future demands of the company’s existing and anticipated new products willingness of the consumers purchase and use of the companies products and ability to increase suspicion and market share for the company’s products domestically and worldwide.
These statements are based on management’s current expectations and are subject to certain risks and uncertainties including without limitation of the following; huge demands of the company’s products may be lower than anticipated, consumers may choose not to adapt the company’s new product offerings or adapt competing products. The company maybe unsuccessful or experience the way the manufacturing and distributing in its new and existing products. Telecommunication service providers may choose to slow their deployment of the company’s products or utilize competing products, and company maybe unable to collect receivables as they become due. The companies may fail to manage calls 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. Further information on potential risks factors that could affect Netgear and its business or details on the company’s periodic filings and so does Securities and Exchange Commission, including but not limited to those risks and uncertainties will sit in the section entitled “Part two: item 1A risk factors,” pages 27 through 38 in the company’s quarterly report on Form 10-Q for the quarterly period and its 10/30/2007, filed with SCC on November 9, 2007.
Netgear undertakes no application through release publicly, any revisions to any forward- looking statements contained here and to effect events or circumstances after the date hereof, which are affect in 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 a non-GAAP and GAAP measures can be found in our press release in the invest relation site at www.neatgear.com.
At this time I would now turn the call over to Patrick Lo. Please go ahead sir.
Thank you everyone for joining today’s call. We have a solid revenue quarter and we have believed we made market share gains in all three regions. Net revenue in Q4 increased 21% to $198.3 million compared to the year-ago period and up 3% sequentially.
On the geographic basis, we sold robust growth in the US year over year and fantastic growth in Asia Pacific. In year growth year-over-year was low due to a very strong Q4 2006 in which there was significant ramp of shipment to BSkyB's.
On North American net revenue was $69.5 million in Q4, a sequential decrease of 9%, while Europe, the Middle East, and Africa. Our Emia(ph) net revenue was $107.1 million, a sequential increase of about 12%.
In our Asian Pacific net revenue was $21.7 million up about 10% over Q3. Comparing to Q4 of 2006 of North America net revenue increased to 35%. Emia net revenue increased 7% while Asia Pacific was up about 72%. With 21% net revenue growth over Q4 of 2006, we believed we continue to gain share globally especially encouraging the performance about emerging markets including China, India, Eastern Europe, the Middle East, and Brazil. The growths of this group are on the percentage basis, it is significantly higher than a corporate average in Q4 and we expect their growth to continue.
We continued to execute on our growth plans in three directions; expansion product offerings, channel diversification and renovation, as well as new geographic market entries. We again made good progress on all three funds in Q4 of 2007.
We introduced an additional 15 new products in the fourth quarter making it a total of 48 new products for 2007. The initial market resection of our new RangeMax end-line of WiFi products based on the latest metro-material multi antenna technology is very robust, and we continue to see the ramp up of our readiness product lines.
Our leadership in animation continued to be recognized by the industry and our customers through our series of awards. We recently received full awards in CES in Las Vegas, which are at follows; PC World Magazine gave our digital entertainment HD the top 10 most innovative product award, we were awarded the best of animation in home networking by the CES show. Laptop Magazine selected us as the best of show in WiFi home networking for CES, and we were selected by Popular Mechanics Magazine as the editor’s choice for CES.
We continued to do well in service provider sales, over all our net revenue from service providers accounted for approximately 23% of total net revenue in the fourth quarter of 2007, as compared to 22% of total net revenue in the third quarter of 2007, and 28% in the fourth quarter of 2006. In Q4, we also increased the number of active value added resellers for almost 10% to close to $40,000.00. We increased our retail footprint by 20% in Q4 of 2007 to over 22,000 retail outlets worldwide. We are also able to successfully hire an experienced accounting manager for Russia; he had started to build our team in Moscow and St. Peter’s Burg. We believe we can start making in rows into this vast market and we expect to see results in 12 to 18 months.
We were not able to achieve our operating margin target of between 11% and 12% in Q4. We underestimated the average charges for the quarter, for reasons such as, higher than historical peak season rate and orders of the charges, and that we have to spend more in airfreight than forecast it in order to supply to our customers around the world. We were forced to strike the balance between not short shifting to our channel partners while minimizing the overrun in airfreight cost. We expect to bring the cost in line in coming quarters. We will also be more conservative on the peak season’s freight rate forecast in Q4 of this year.
Over all, Q4 was a successful quarter in executing our channel programs and product promotions across all three regions. We are pleased with the market’s overwhelming acceptance of our readiness product lines, our service provider revenue momentum and healthy and market demand. We continued to see good market reception in our SMART switches and our RangeMax-G and RangeMax-N WiFi products. We believe the momentum will continue in 2008, let me now turn the call over to Christine for details on our financials.
Let me now provide you with the summary of the financials for Q4, as Patrick just noted, net revenue for the fourth quarter endings December 31, 2007 was $198.3 million, a 21% increase as compared to $164 million for the fourth quarter ended in December 31, 2006 and an increase of 3% as compared to $191.7 million in the third quarter ended September 30, 2007.
Net revenue in the fourth quarter of 2007 by geography was $69.5 million for North America and $107.1 million for the Europe, Middle East, and Africa region and $21.7 million for the Asia Pacific region. We shift about 4.4 million units in fourth quarter including 3.6 million nodes of wireless products. Shipments of our wired and wireless routers and gateways combined were up sequentially 16% to about 2.3 million units.
Moving to the product category basis, the fourth quarter net revenue split between wireless and wired is about 61% and 39% respectively, relatively unchanged from the Third Quarter of 2007. The Fourth Quarter net Revenue split between home and small business products was about 65% and 35%, relatively the same as the Third Quarter of 2007. Products introduced in the last 15 months constituted about 25% of Fourth Quarter shipments, while products introduced in the last 12 months constituted about 22% of Fourth Quarter shipment. Non-GAAP gross margin in Fourth Quarter 2007 with 32.4%, as compared with 3.25% in the year ago comparable quarter and 34% in the Third Quarter of 2007.
Moving to non-GAAP operating expenses, total non-GAAP operating expenses, which excludes litigation reserves and acquisition related retention bonuses, as well as non-cash stock based compensation cost came in at $42.8 million for Fourth Quarter of 2007, this compares to non-GAAP operating expenses of $34.3 million in the Fourth Quarter 2006 and $42.8 million in the Third Quarter of 2007.
Q4 2007 Operating Expenses represented 21.6% of net revenue. This is an increase of 70 basis points, compared to the Fourth Quarter 2006. Primarily due to investment in R& D, as well in our merging market and it is a decrease of 70 basis points, compared to the Third Quarter of 2007, primarily due to expense reduction. Non-GAAP sales and marketing expenses with $30.5 million, as a percentage of net revenue, sales and marketing expenses were 15.4% in Q4 2007, as compared to 14.9% in Q4 2006 and 15.5% in Q3 of 2007. The increase year-over-year in sales and marketing expenses is due to our investment in footprint in the emerging market. Non-GAAP R&D expenses were $6.4 million. This represents 3.2% in net revenue in Q4 2007, as compared to 2.8% in Q4 of 2006 and 3.6% in Q3 of 2007.
Non-GAAP SG&A expenses in the Fourth Quarter were $5.8 million or 2.9% of net revenue, compared to 3.2% in the year ago period and 3.2% in the Third Quarter of 2007. Operating income on a GAAP basis were $17.9 million, which includes $1.2 million in charges for amortization of purchase intangible and acquisition related retention bonuses. A $35,000 reduction in litigation reserve, as well as non-cash stock-based compensation of $2.3 million, this compares to GAAP Operating Income of $17.3 million in the year ago Fourth Quarter and $18.5 million in the Third Quarter of 2007. On a GAAP basis, the company recorded net income of $12.5 million or 35 cents per diluted share for Fourth Quarter 2007, compared to net income of $13.4 million or 38 cents per diluted share for the Fourth Quarter of 2006 and $13.3 million or 37 cents per diluted share in the Third Quarter 2007.
Net income on a non-GAAP basis for the Fourth Quarter 2007 was $14.8 million, as compared to non-GAAP net income of $14.9 million for the Fourth Quarter 2006 and non-GAAP net income of $16 million for the Third Quarter of 2007. Non-GAAP net income with 41 cents per diluted share in Fourth Quarter of 2007, compared to 43 cents per diluted share in the Fourth Quarter of 2006 and 44 cents for the Third Quarter of 2007. For calculating EPS, we use the fully diluted stock count of 36.1 million shares for Q4 versus 36 million shares for the prior quarter and 35 million shares for Q4 of 2006. In Q4 2007, there was a currency gain of $146,000, compared to a gain $1.9 million in Q4 2006 and a gain of approximately $1.7 million in Q3 of this year. The non-GAAP tax rate was 37.4% in the Fourth Quarter of 2007, compared to 34.9% in the prior year Fourth Quarter and 38.4% in the Third Quarter of 2007. The reconciliation of GAAP to non-GAAP to details in our financial statement relate earlier today.
Moving on to the balance sheet, we ended the Fourth Quarter with $205.5 million or approximately $5.69 per diluted share in cash, cash equivalent and short-term investment, compared to a total of $177.2 million at the end of the Third Quarter or approximately $4.93 per diluted share and $197.5 million at the end of the Fourth Quarter 2006 or approximately $5.64 per diluted share. Please not that in May 2007, we paid approximately $16 million in cash for the acquisition of imprint technology.
In terms of inventory trend, we ended the Fourth Quarter 2007 with inventory of $83 million and ending inventory turn to 6.5, compared to 5.7 turn at the end of Fourth Quarter 2006 and 6.5 turn at the end of the Third Quarter 2007. Days sales outstanding were 73 in the Fourth Quarter 2007, compared to 66 days in the Fourth Quarter of 2006 and 66 days ended the first Third Quarter of 2007, this remain with our historical range of 65 to 67 days. As outlined in our earnings release, our channel inventory came in line with our target, slightly lower in retail and slightly higher in distribution channel. Total assets were approximately $551 million at the end of the Fourth Quarter 2007, compared to $438 million at the Fourth Quarter of 2006 and $5 million at the end of the Third Quarter of 2007. Deferred Revenue, decrease slightly to $7.6 million, as compared to $7.8 million at the end of the prior quarter and $8.2 million at the end of the Fourth Quarter of 2006.
We are optimistic that 2008 will be another growth year for the industry and particularly, for Netgear. We expect normal seasonality in Q1 of 2008. Specifically, we expect First quarter net revenue to be approximately $201 million to $205 million, with non-GAAP operating margins in a range of 11% to 12%. Finally, we expect the non-GAAP effective tax rate to be approximately 39%.
Operators that concludes our comments and we can now take any questions.
Question and Answer Session
Our first question from the line of Inda Sing (ph) with Lehman Bros.
Inda - Lehman Bros.
We are taking at a pretty solid quarter there Patrick, in terms of revenue, you know despite some of the fears on consumer slowdown etc., hanging over the market. It looks like your revenues came in nicely, obviously, this freight cost issue was up to get a little bit color on what’s gross at, but certainly, it looks like December quarter you were able to get the numbers there and ability for a seasonal quarter in March. How confident are you about the consumer hanging in there, giving your exposure to that part of the market and to what extent do you think that emerging markets that you talked about, as well as your kin business will be able to offset any consumer weakness that may happens that perhaps we have not seen so far.
I think there were three parts of the question, the first part regarding, we are coming in the revenue, the high end of our guided range, yes that is true. The end market demand in Q4 was very robust across the world in all three regions that we operate, had we not really under forecast airfreight rates, we would have been able to ship even more to the customers, exemplified by our much lower than what we were like retail generally inventory. So, as mentioned that many have time, our business is primarily driven by our target customers’ adoption of broadband services and we still believe that even in the developed world, like in the US and Western Europe, that is still hovering around 40 % and that is still low, if you look at the penetration of mobile phones or TV’s that is in the 80%, 90% or even 100% in some countries so we still have a long way to go and if you are getting merging market then the broadband service adoption rate is even lower so there is a long way to go.
So unless there is a drastic happening in the world or if some people stop adopting broadband we have not seen the slow down in end market demand for our products yet. And, so that is why we feel pretty good that in the year 2008 the adoption of broadband services and thus various home networking gears amount our customer based around the world would still be very, very encouraging. Especially we see—as you probably saw in our figures that Asia Pacific is going very nicely on a year-on-year basis and we expect that to continue; and also we also mentioned just now that the growth also in Eastern Europe, in Southern Europe and in Middle East are also doing very well for us. And, we have yet really to start in Russia which would probably bring in results 12 to 18 months from now. So we feel pretty confident that the broadband adoption will continue to go and that will benefit our industry as well as ourselves in particular.
In terms of your third part of question which is a little bit color on the freight charges; as you probably know the past three, four months have seen a significant I mean above historical serge in oil prices. I think we are too naïve to believe that historical 2-4 airfreight race could be applied with an annual updates but then this year we were surprised that the update was actually significantly higher than what we thought it would be, so we completely missed that part and we have to really scale back and in every amount of airfreight we have to do so that hurts our channel inventory as well as the part—some of our revenue. But even so, we still are spending a lot more airfreight expenses than we would like to; I think right now we have strut the best compromise between not short shipping even more to our channel versus not over running even more on airfreight charges.
Going forward I mean we are taking actions a few things; one, we will be beating all the airport services out so that we would be able to probably get a more favorable rate going forward. Secondly, we are tweaking our models so coming this year we probably will be a lot more conservative in estimating the oils of charges and peak seasons of charges to Q4 and thirdly, we probably would be taking a mix, a ship that would take on more inventory ahead of time that to reduce the amount of airfreight we need to do for Q4. So that is pretty much the jigs of what happened.
Inda - Lehman Bros.
If I could just clarify, on the airfreight is it fair to assume therefore that the increase in airfreight cost was primarily rate and not volume shipped or was it a mix of both?
Certainly there is volume involvement because Q4 significant volume over Q3 as you could see our volume increased by 10% it went out from $4 million unit shipped to $4.4 million unit shipped, so clearly I mean naturally there is at least a 10% volume for airfreight sequential; and when you compare to Q4 last year that gross is even higher. But the rate also is significantly higher than last year.
Our next question comes from the line of Samuel Wilson with JMP Securities; please proceed with your question.
Samuel Wilson - JMP Securities
One of major question and non distant small question first, I know it is a little bit difficult to give any way of sort of quantifying how much extra you had to pay in airfreights? Just so that we can get a sense of what gross margins would have been without the extra charging; what were you generally targeting from margins I guess that is another way of saying it?
It is very difficult to say that what I can say that is significantly higher than we have originally budgeted, so we have been trying to rain in expenses in some other area to compensate while the extra airfreight that we need to put in however at the end of it I think we feel falling short to where we want to end in operating margin, so if you figure hey we would like to end the operating margin 11.5% we missed it by 8-10 of a blank and that pretty much the amount that we could not recover from any further expense reduction; or alternatively we could short shipped to our customers that would reduced the airfreight as well but I think the scale is basically in the range that we are missing what we would like it to be in to be in operating margin range.
Samuel Wilson - JMP Securities
Got it, and then can you just sort of give a head count, cash from operations, CAPEX and track update from your notes several years since you have created your -- subsidiary.
Sure, cash provided by operating activity toward the quarter about $29.1 million, CAPEX is $3.2 million, and head count at the end of Q4 is 517. Flat rate if you saw a non GAAP was 37.4% at the end of this quarter and I think I said that in our international operation somewhere we are operating in all the different regions and trying to maximize our tax provisions around the world and in Q4 is really a quarter where we had actual numbers and we are not doing any estimating at that point; so I think we are pleased with or progress in that area.
Samuel Wilson - JMP Securities
Right, bumping up to 39 and do we have any expectations here over the next few years you should be getting down on the low 30 at some point?
I think when in any case like that the rate will come down for about 4 or 4.5 years. So expectations at about 39 and what I would say is tax rate -- 48 adoption where up or down 100 basis points within the—right now as we walk into the beginning it is one quarter -- will be three quarters in forecast; and we are being a little conservative on that number.
Our next question comes from the line of Maynard Um from UBS. Please proceed with your question.
Maynard Um – UBS
Just related to the shipping; you indicated that the cost will come back in line in the coming quarters and you got some 11 to 12% does not seem to reflect in ongoing impact there or I guess you said you are going to get cost savings elsewhere, can you just talk about where those cost savings are coming from to offset and should we expect a greater than 11 to 12% operating margins once you get those freight cost coming back in line and then related to that I think you said that you short some shipments to minimize cost, can you help quantify the amount that you pulled back on unit volumes as well in the quarter?
On the first one as I mentioned we are beating the airfreight services and hopefully we can get that a rate out of that, secondly once you path Q4 that peak season surcharge is gone so we are just facing the ordinary oil charges but luckily if you probably know the oil as we treated back into the$80.00 range so that help us a little bit, but of course we cannot depend on that forever. So what we are doing is we have instituted a software; a new forecasting software **08:00 that will help us to increase our accuracy of forecasting the mix and that would help us to reduce the amount of airfreight that we need to do going forward so we expect that investment on that software to pay off. And, certainly and the big path is going be Q4 this year when the peak season rate is going to be snapped on us again, but in the meantime what we are trying to do is one, reduce the cost by re beating the services, secondly continually improve on the accuracy of the forecast on the mix would be new software, so that is where we are heading.
No, in terms of estimating if we have unlimited amount of airfreight money to spend how much more revenue we can get. I mean it is pretty easy, we can usually, I mean you could calculate I could easily put another week or two into the retailers on the old dying form inventory, we have not been this low in US retail for a long time.
Maynard Um – UBS
And, I guess also related should we anticipate you talking about the inventories that you will probably hold a high level of inventory, so should we anticipate that going forward for the next several quarters then coming back to more normalize levels?
The return of inventory is actually very low historically at a turn of 6.5 which is probably one of the highest historically, yes we do expect that we will bump it up a little bit in order to reduce the amount of airfreight that we have to use. So going forward ***09:35 a new forecasting process and soft works wonder then we will be able to bring it back down.
Our next question comes from the line of Stanley Cobbler with Merrill Lynch.
Stanley Cobbler– Merrill Lynch
First of all this is about the seasonality and what impact you could have had what revenues actually you could have had if you were able to get your shipping cost balance, seems that if we adjust the calyx of inventory to a reasonable number and looks like the guidance into the First quarter is pretty flattish and I am wondering if that reflects a normal pattern.
Yes, generally speaking Q1 is flat to Q4, but sometimes that if you that have gain in your account, that could be better. But, generally seasonality wise Q1 is flat to Q4.
Stanley Cobbler– Merrill Lynch
Building on the subject, I am wondering if you can also talk about some of the surf provider, when they just made any major ones in the quarter or progress that you made whether or not be as a 10% customer again.
These guys are not a 10% customer. They have not been for a few quarters, we have not significant service provider, when in Q4 we did win some really interesting projects, for example with one a new, relative small projects to them, but pretty big to us, from China Telecom and we also won another very good customer, cable operators in Finland. So, those are some of the new ones that we added, but no significant ones as big as Big Sky BR, Charter Communications of Time-on or Com. Cat, that kind of scale.
Stanley Cobbler– Merrill Lynch
Last one as I came through, it is about the assume be switching business, very strong growth over this past year, looks about well over 30% for 2007 and you have in Francis. Well, what it is the outlook given the environment, are you seeing this quarter already, you voted for a guidance, but in January it slow down in that side of your business.
We do not think so. We believe that there is a tremendous shift in the market place, among SMB for the lower end of the SMB, the small business. We continue to gain more traction and preference in our admonished switch, I terms of the medium-sized business, there is tremendous technology shift among them, going away from managed layer 2, layer 3, SNMP switches into smart switches, so that really is going to continue to benefit us.
Our next question comes from the line of Jason Ader with Thomas Weisel Partners.
Jason Ader – Thomas Weisel Partners
Patrick, could you comment on some of the products that when in high demand at the end of the quarter that you count on to that, you do air freight, but you can air freighted it more if you are able to sell. Could you at least give a sense of, which are the products that are sort of the high products right now that retailers want?
Yes, you hear in ahead is the retail as want, so for example, I will bet seven products among the retailers are definitely R&H Max, line of products the Range Max Key, as well as the Vanilla Eleven G, Routers and Carts, those are in high demand. As a matter of fact, even our unmanaged switches selling in the retail stores are doing very well. Actually some of them are short, as well, so those are some of the part, primarily on retail shelves; those are the products that we are short.
Jason Ader – Thomas Weisel Partners
In terms of the … following up on the last question on the Macron environment, obviously we seen some softness, both in the US and the UK on the retail side, but you said you really see any sales, in terms of your business at this point, is that correct?
Correct, not only in our business, but also in or category of products, we do not see the weakness.
Jason Ader – Thomas Weisel Partners
Okay, and then on the SMB side, there are some theaters certainly in that area, you have one month of data, you know that is not lot, but month false of data, so you can say that the SMB side also looks the same. There is no really known any kind of material change in your view at this point?
As I mentioned just now, the SMB is a little bit a different story. I think we are benefiting from a technology shift, from layer to layer three switches to smart switches and also, we are benefiting from the fact that people are galvanizing tools, backing-up the data that is why buying our NASQ products. So, I think on the SMB side, we are not benefiting so much on the robustness of the market, but on our ability to gain share with undifferentiated products.
Our next question comes from the line Adam Benjamin, with Jeffrey’s.
Adam Benjamin, - Jeffrey’s
Patrick, can you comment a little bit on the distribution inventory levels and they seem to be a little bit higher as you execute for than historically. Are you concerned about that? Can you give some more color?
Usually in January our discuses in the light of stock are a little bit for a variety of reasons, one that there are a lot of post-Christmas sales on the online sites. Especially, for example like --, they end the year in January, so you expect that they go quite a bit in January, so they are supplied by distributors. So, distributors have to stock up to really to supply to them. And, secondly, because we do our physical stock take in the first week of January, so worldwide, we stop shifting in the first week of January, so that is why most of our distributors was stocked-up also, in preparation for that. We are not worried about the slightly uptake in the distribution inventory.
Adam Benjamin, - Jeffrey’s
So, if you were to characterize it, you feel it is healthy, very healthy or just normal?
Yes, it is just normal.
Adam Benjamin, - Jeffrey’s
Okay and then, can you talk a little bit about Eleven End Picture, adoption, how are you seeing the uptake of union products that you introduced and as you look out the rest of this year, how do you expect that to face in as percentage of mix versus GD. Do you think it is going to be as high as 50% exit the year or is a lot lower than that? Can you give a perspective that will be helpful?
I think the Eleven End Picture have not changed, since we discussed last time. Eleven end is about 25% in revenue share in the retail market in the US and much less than that in Europe. Certainly, our introduction of our Met-antenna, metal material antenna, we call it Range Max N is causing a steer, judging from the initial sale and best buy and we are very encouraged by that. We believe that the Eleven End adoption will gradually go forward; it will not be a step wise jump for a variety of reasons. One, the price point is still not enticing for a step wide jump. Secondly, I Triple E is probably not going to rectify the -- until next year. We are talking about 2009 now, so I think the growth of the Eleven End will be gradual, however, with our differentiated technology, which provides extra boost in range, performance and throughput to our customers. We believe that we will continue to win share in this gradual growth category.
Our next question comes from the line of Larry Harris – CL King
Larry Harris – CL King
I believe you indicated that you gained market share in all regions, like you quantify what you think your current market share is in the various regions, as we might be gaining share from, thank you.
Well, for example, in the US retail, the latest retail that we had from a public reporting company called NPD, we have grown our market share to roughly about 23% to 24% range. And, clearly we are gaining share against everybody. You name it, D-Link, Linksys a little bit in Europe, as well, for example like in France, Germany and UK. We are also gaining share against, for example in the UK, we are now in the UK retail, we are in the mid 30% we have been gaining against Belkin and the lesser brands, like D-Llink. In Germany, our market shares is roughly about 17% win neck-to-neck in Germany with a local brand call ABM and we have been gaining share against for the D-link and the smaller brands. In files, we are closely to 30% market share in retail and again, we are gaining share against the billing and some of the local brands.
Larry Harris – CL King
Thank you very much, that is very helpful.
It appears that there are no further questions at this time. Do you have any closing comments?
Yes, thank you everybody for joining us with few very good in our products channel and technology execution, we believe that we have really differentiated technologies and for example the WiFi products in a multi-antenna metro-material which is patented that we call—we actually partner with -- and also in the emerging net technology we have our very hot pending x-ray technology that enhance our net about everyone else and also the ones SMART switches that we pioneered again is driving the industry shift. So we feel very strongly that our channel at our product and technology execution is on the right path. In terms of market execution also we see tremendous growth in all the emerging markets and we are very encourage that we have the possibility to make some in rows in the last emerging market that we have yet to get into Russia, and we believe that we will see some results in that marking 12 to 18 months.
So we feel very good about the prospects and we will continue to execute and look forward to talking to you again in another two and a half months.
Ladies and Gentlemen this concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.
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