SECURITIES AND EXCHANGE COMMISSION

AMENDMENT NO. 6 TO

NETGEAR, Inc.

NETGEAR, Inc.

Patrick C.S. Lo

Copies to:

    Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

CALCULATION OF REGISTRATION FEE

(1)	Includes 1,350,000 shares which the Underwriters have the option to purchase to cover over-allotments, if any.
(2)	Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457 under the Securities Act of 1933.

    The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any statejurisdiction where the offer or sale is not permitted.

Subject to Completion, dated July 30, 2003March 5, 2004

7,000,0009,000,000 Shares

Common Stock

WeThe selling stockholders named in this prospectus are offering 7,000,000selling 9,000,000 shares of our common stock in this initial public offering. No public market currently exists for our common stock. We will not receive any of the proceeds from the sale of shares by the selling stockholders.

Our common stock has been approved for quotationshares are quoted on the Nasdaq National Market under the symbol “NTGR,“NTGR.” subject to official noticeOn March 5, 2004, the last sale price of issuance. We anticipate thatour common stock as reported on the initial public offering price will be between $10 and $12Nasdaq National Market was $14.80 per share.

Investing in our common stock involves risks. See “Risk Factors” beginning on page 6.5.

WeThe selling stockholders have granted the underwriters a 30-day option to purchase up to 1,050,000an aggregate of 1,350,000 additional shares of common stock aton the public offering price less the underwriting discountsame terms as set forth above to cover over-allotments.over-allotments, if any.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Lehman Brothers, on behalf of the underwriters, expects to deliver the shares on or about                     , 2003.2004.

                        , 20032004

[NETGEAR logo with the caption: “Small Business Networking, Ethernet Switches, Secure Virtual Private Network Firewalls, Business Wireless Local Area Network” and photographs of four small business networking products. the caption: “home networking, shared broadband internet access, telecommuting, home wireless local area network” follows, accompanied by photographs of four home networking products.]

TABLE OF CONTENTS

     Until                     , 2003, 25 days afterYou should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information that is different from that contained in this prospectus. This prospectus is not an offer to sell or a solicitation of an offer to buy shares in any jurisdiction where such offer or any sale of shares would be unlawful. The information in this prospectus is complete and accurate only as of the date on the front cover regardless of the time of delivery of this offering, all dealers that effect transactions in our shares, whetherprospectus or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.of any sale of shares.

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PROSPECTUS SUMMARY

     This summary highlights key aspects of the information contained elsewhere in this prospectus. This summaryprospectus and does not contain all of the information you should consider before investing in our common stock.making your investment decision. You should read this entire prospectus carefully, especiallysummary together with the risks of investingmore detailed information, including our financial statements and related notes, elsewhere in our common stock discussed under “Risk Factors.”this prospectus.

NETGEAR, Inc.

     We design, develop and market technologically advanced, branded networking products that address the specific needs of small business and home users. We supply networking products that meet the ease-of-use, quality, reliability, performance and affordability requirements of these users. Our suite of approximately 100 products enables users to share Internet access, peripherals, files, digital multimedia content and applications among multiple personal computers and other Internet-enabled devices.

     Since our inception in 1996, we have been focused solely on the networking needs of the small business, which we define as businesses with fewer than 250 employees, and home markets, and we have shipped over 1722 million units. As a result of our brand name, the implementation of our operating strategy and the growth in demand for networking products within small businesses and homes, we have achieved net revenue growth in each year since our inception, reaching $237.3$299.3 million in net revenue for 2002.2003. In 2002,2003, we had net income of $8.1$13.1 million. As a result of a deemed dividend on preferred stock of $17.9 million recorded during 2002, we had a net loss attributable to common stockholders of $9.7 million for the year. We had net income of $1.6 million for the three months ended March 30, 2003. We have operated at a net loss for threetwo of the last five years and our accumulated deficit as of March 30,December 31, 2003, was $36.8$25.3 million. Continued growth and profitability of our business will depend on many factors, including growth in demand for networking products by small business and home users.

     Our net revenue is balanced worldwide, with 63%58% of our 20022003 net revenue derived from sales in the United StatesNorth America and 37%42% derived from international sales. Our global sales channel network includes traditional retailers with over 2,8003,700 retail locations in North America, including Best Buy, CompUSA and Staples, and over 2,5003,300 international retail locations such as PC World in the United Kingdom and MediaMarkt in Germany and Austria, as well as online retailers such as Amazon.com and Buy.com. In addition, we sell our products both domesticallyin North America and internationally through direct market resellers such as CDW and MicroWarehouse,Corporation, and thousands of value added resellers. We are also increasingly selling our products through broadband service providers such as Time-Warner Cable and Telewest UK.Comcast Cable Communications. In 2002,2003, sales to our largest distributors, Ingram Micro, Inc. and Tech Data Corporation, and their affiliates, accounted for approximately 52%46% of our net revenue.

     A number of factors are driving increased demand for networking products within small businesses and homes, including the need to share information, broadband Internet access and resources among multiple users and devices. Users are also demanding the convenience and flexibility of wireless networking and are increasingly focused on the security of their network connections. Our networking products for the small business and home markets are classified into the following three categories:

     Ethernet networking products, including switches (multiple port devices used to network personal computers and peripherals); network interface cards, or network adapters, and bridges (devices that connect personal computers and other equipment to a network); and peripheral servers such as print servers (devices that manage printing on a network).

     Broadband products, including routers (intelligent devices used to connect two networks together, such as a local area network and the Internet), gateways (a router with an integrated modem for Internet access), and products that include an integrated wireless access point such as a wireless gateway.

     Wireless networking products, including access points (devices that provide a wireless link between the wired network and wireless devices), wireless network interface cards, or network adapters, and media adapters and bridges (devices that wirelessly connect personal computers, stereos, TVs and other equipment to a network).

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     We believe that our products meet the specific needs of small business and home users and that we have the following competitive strengths:

	•	Reliable, easy-to-use, affordable products. Our networking products are easy to install, use and maintain, and satisfy the budgetary requirements of small business and home users.
	•	Broad product offering. We offer a broad range of networking products for small business and home users for use in a variety of networking environments, including traditional Ethernet cabling and wireless.
	•	Global channel presence.We sell our products in North America, Europe, Middle-East, and Africa, or EMEA, and Asia Pacific through an extensive sales channel network, which includes traditional retailers, online retailers, direct market resellers, value added resellers and broadband service providers.
	•	History of product innovation. We have a history of introducing new technologies to the small business and home markets. We believe our experience, market presence and global reach enable us to identify trends in product demand and rapidly introduce products to meet that demand.
	•	Operational discipline. We work closely with our component vendors as well as our design and manufacturing partners in China and Taiwan to bring products to market quickly, minimize product costs and ensure product quality. In addition, we maintain operational discipline over product development and supply chain and channel inventory management.

     Our suite of products areis designed specifically to meet the needs of the small business and home markets, including tailored component specifications, physical characteristics, and hardware and software features.

Corporate Information

     We were incorporated in Delaware on January 8, 1996 as a wholly-owned subsidiary of Bay Networks, Inc. to focus exclusively on providing networking solutions for small businesses and homes. In August 1998, Nortel Networks NA Inc. purchased Bay Networks, and we remained a wholly-owned subsidiary of Nortel Networks until March 2000, when we sold a portion of our capital stock to a third party. In September 2000, Nortel Networks sold a portion of its ownership interest in NETGEAR to third parties. In February 2002, Nortel Networks sold all of its remaining ownership interest to us in exchange for cash, non-cash consideration and a $20.0 million promissory note, which we intend to repay upon the completion of this offering.1996. Our principal executive offices are located at 4500 Great America Parkway, Santa Clara, California 95054, and our telephone number is (408) 907-8000. We maintain a web site at www.NETGEAR.com. The reference to our web address does not constitute incorporation by reference of the information contained at this site.

     NETGEAR is a registered trademark of ours. Other trademarks and trade names appearing in this prospectus are the property of their respective holders.

     You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information that is different from that contained in this prospectus. This prospectus is not an offer to sell or a solicitation of an offer to buy shares in any jurisdiction where such offer or any sales of shares would be unlawful. The information in this prospectus is complete and accurate only as of the date of the front cover regardless of the time of delivery of this prospectus or of any sale of shares. In this prospectus, the “Company,“company,” “NETGEAR,” “we,” “us” and “our” refer to NETGEAR, Inc., a Delaware corporation, and its consolidated subsidiaries.

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The Offering

     The number of shares of common stock that will be outstanding after this offering is based on the number of shares of common stock outstanding on March 30, 2003February 20, 2004, and excludes:

	•	6,436,8175,301,622 shares of common stock subject to stock options outstanding as of March 30, 2003,February 20, 2004, with a weighted average exercise price of $4.76$5.98 per share;
	•	218,750 shares of common stock subject to a warrant outstanding as of March 30, 2003, with an exercise price of $1.29 per share; and
	•	956,9331,305,674 shares of common stock available for future grant or issuance under our stock plan as of March 30, 2003.February 20, 2004; and
	•	500,000 shares of common stock available for future grant or issuance under our employee stock purchase plan as of February 20, 2004.

     As of February 20, 2004, the selling stockholders held 59.9% of our outstanding common stock. After giving effect to this offering and assuming no exercise of the underwriters’ over-allotment option, the selling stockholders will own approximately 29.5% of our outstanding common stock.

     Unless otherwise indicated, all information in this prospectus assumes that the underwriters do not exercise the over-allotment option that the selling stockholders have granted them to purchase additional shares in this offering, and that all of our outstanding redeemable convertible preferred stock is converted into common stock on a 1-for-1 basis uponas described in the closing“Underwriting” section of this offering. The share and per share amounts presented in this prospectus have been retroactively restated to give effect to a 1.75-for-1 split of our capital stock to be effected prior to the completion of this offering.prospectus.

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Summary Consolidated Financial Data

     The following tables summarize consolidated financial data regarding our business and should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus.

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     Pro forma amounts give effect to the automatic conversion of all outstanding shares of our redeemable convertible preferred stock into common stock upon the closing of this offering.

     Pro forma as adjusted amounts give effect to the issuance and sale of shares of our common stock at an assumed initial public offering price of $11.00 per share, and the receipt and application of the net proceeds from this offering, after deducting the underwriting discount and estimated offering expenses payable by us, and the repayment of a $20.0 million note payable to Nortel Networks (which is carried at its net present value of $13.7 million) and the incurrence of a related extinguishment of debt charge of approximately $6.3 million, as set forth under “Use of Proceeds” and “Capitalization.”

Recent Developments

     The following are our unaudited results for the quarter ended June 29, 2003, however we have not finalized our financial statements for this period. When actual results of operations are finalized, it is possible that the results will vary from the amounts set forth below. For the quarter ended June 29, 2003, our net revenue was $69.0 million. For this period, our gross profit was $19.1 million, with a gross margin of 27.6%. Our income from operations for the quarter ended June 29, 2003 was $3.3 million, which included amortization of deferred stock-based compensation of $422,000.

     This information should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus. Please see page 33 of this prospectus for selected quarterly results of operations for the quarter ended June 30, 2002 as well as our other past eight quarters.

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RISK FACTORS

     You should carefully consider the following information about the risks described below, together with the financial and other information contained in this prospectus, before you decide to buy our common stock.

Risks Related to Our Business and Industry

We expect our operating results to fluctuate on a quarterly and annual basis, which could cause our stock price to fluctuate andor decline.

     Our operating results are difficult to predict and may fluctuate substantially from quarter-to-quarter or year-to-year for a variety of reasons, many of which are beyond our control. As we implement our growth strategy, our expenditures may become significantly higher than our historical costs. We may not generate revenue sufficient to offset these expenditures or adjust spending in a timely manner to respond to any unanticipated decline in our revenue. If we are unable to manage our growth, we may experience significant losses on a quarterly and annual basis. As of December 31, 2002, we had an accumulated deficit of $38.4 million. Although we achieved net income of $2.7 million in 2000, we incurred a net loss of $19.5 million in 2001, before returning to profitability in 2002, with net income of $8.1 million for the year (although a deemed dividend on preferred stock resulted in a net loss attributable to common stockholders of $9.7 million for 2002). If our actual revenue were to fall below our estimates or the expectations of public market analysts or investors, our quarterly and annual results would be negatively impacted.impacted and the price of our stock could decline. Other factors that could affect our quarterly and annual operating results include those listed in this “Risk Factors” section of this prospectus and others such as:

	•	changes in the pricing policies of or the introduction of new products or product enhancements by us or our competitors;
	•	changes in the terms of our contracts with customers or suppliers;
	•	slow or negative growth in the networking product, personal computer, Internet infrastructure, home electronics and related technology markets, as well as decreased demand for Internet access;
	•	changes in or consolidation of our sales channel and wholesale distributor relationships or failure to manage our sales channel inventory and warehousing requirements;
	•	delay or failure to fulfill orders for our products on a timely basis;
	•	our inability to accurately forecast our contract manufacturing needs;
	•	delays in the introduction of new or enhanced products by us or market acceptance of these products;
	•	increasesan increase in price protection claims, redemptions of marketing rebates, product warranty returns and reservesor allowance for doubtful accounts;
	•	operational disruptions, such as transportation delays or failure of our order processing system, particularly if they occur at the end of a fiscal quarter; and
	•	seasonal patterns including aof higher concentration of sales during the second half of our fiscal year.year, particularly retail-related sales in our fourth quarter.

     As a result, period-to-period comparisons of our operating results may not be meaningful, and you should not rely on them as an indication of our future performance. In addition, our future operating results may fall below the expectations of public market analysts or investors. In this event, our stock price could decline significantly, which could result in our being the target of a securities class action lawsuit.

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significantly.

Our future success is dependent on the acceptance of networking products in the small business and home markets into which we sell substantially all of our products. If the acceptance of networking products in these markets does not continue to grow, we will be unable to increase or sustain our net revenue, and our business will be severely harmed.

     We believe that growth in the small business market will depend, in significant part, on the growth of the number of personal computers purchased by these end users and the demand for sharing data intensive applications, such as large graphic files. We believe that acceptance of networking products in the home will depend upon the availability of affordable broadband Internet access and increased demand for wireless products. Unless these markets continue to grow, our business will be unable to expand, which could cause the value of your investment to decline. Moreover, if networking functions are integrated more directly into personal computers and other Internet-enabled devices, such as electronic games or personal video recorders, and these devices do not rely upon external network-enabling devices, sales of our products could suffer. In addition, if the small business or home markets experience a recession or other cyclical effects that diminish

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Some of our competitors have substantially greater resources than we do, and to be competitive we may be required to lower our prices or increase our advertising expenditures or other expenses, which could result in reduced margins and loss of market share.

     We compete in a rapidly evolving and highly competitive market, and we expect competition to intensify. Our principal competitors in the small business market include 3Com Corporation, Allied Telesyn International, Cisco Systems, Inc., Dell Computer Corporation, D-Link Systems, Inc., Hewlett-Packard Company, The Linksys Group (recently acquired bydivision of Cisco Systems)Systems and Nortel Networks. Our principal competitors in the home market include Belkin Corporation, D-Link, The Linksys division of Cisco Systems and Microsoft Corporation. Other current and potential competitors include numerous local vendors such as Corega International SA and Melco, Inc./ Buffalo Technology in Japan and TP-Link in China. Our potential competitors also include consumer electronics vendors who could integrate networking capabilities into their line of products.

     Many of our existing and potential competitors have longer operating histories, greater name recognition and substantially greater financial, technical, sales, marketing and other resources, including Cisco Systems and Microsoft. These competitors may, among other things, undertake more extensive marketing campaigns, adopt more aggressive pricing policies, obtain more favorable pricing from suppliers and manufacturers and exert more influence on the sales channel than we can. In June 2003, Cisco Systems recently acquired The Linksys Group, a major competitor of ours. In particular, Cisco Systems has substantial resources that it may direct to developing or purchasing advanced technology, which might be superior to ours. In addition, it may direct substantial resources to expand its Linksys division’s distribution channel and to increase its advertising expenditures or otherwise use its resources to successfully compete. Any of these actions could cause us to materially increase our expenses, and could result in our being unable to successfully compete, which would harm our results of operations. We anticipate that current and potential competitors will also intensify their efforts to penetrate our target markets. These competitors may have more advanced technology, more extensive distribution channels, stronger brand names, greater access to shelf space in retail locations, bigger promotional budgets and larger customer bases than we do. These companies could devote more capital resources to develop, manufacture and market competing products than we could. If any of these companies are successful in competing against us, our sales could decline, our margins could be negatively impacted, and we could lose market share, any of which could seriously harm our business and results of operations.

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The average selling prices of our products typically decrease rapidly over the sales cycle of the product, which may negatively affect our gross margins.

     Our products typically experience price erosion, a fairly rapid reduction in the average selling prices over their respective sales cycles. In order to sell products that have a falling average selling price and maintain margins at the same time, we need to continually reduce product and manufacturing costs. To manage manufacturing costs, we must collaborate with our third-party manufacturers to engineer the most cost-effective design for our products. In addition, we must carefully manage the price paid for components used in our products. We must also successfully manage our freight and inventory costs to reduce overall product costs. We also need to continually introduce new products with higher sales prices and gross margins in order to maintain our overall gross margins. If we are unable to manage the cost of older products or successfully introduce new products with higher gross margins, our net revenue and averageoverall gross margin would likely decline.

If we fail to continue to introduce new products and product enhancements that achieve broad market acceptance on a timely basis, we will not be able to compete effectively and we will be unable to increase or maintain net revenue and gross margins.

     We operate in a highly competitive, quickly changing environment, and our future success depends on our ability to develop and introduce new products and product enhancements that achieve broad market acceptance in the small business and home markets. Our future success will depend in large part upon our

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     We have experienced delays in releasing new products and product enhancements in the past, which resulted in lower quarterly net revenue than expected. For example, in 2000, we introduced a proprietary wireless networking solution. Later, we decided to re-design our products to be compliant with the 802.11 standard promulgated by the Institute of Electrical and Electronic Engineers. As a result, we introduced our wireless local area networking, or LAN, 802.11b products in the first quarter of 2001, six months behind some of our competitors. In addition, we have experienced unanticipated delays in product introductions beyond announced release dates. Also, we announced in the second quarter of 2001 that our Gigabit manageable switches would be available in 2001. These products were actually made available in the fourth quarter of 2002 due toAny future delays in porting software to a new central processing unit. Delays in product development and introduction could result in:

	•	loss of or delay in revenue and loss of market share;
	•	negative publicity and damage to our reputation and brand;
	•	decline in the average selling price of our products; and
	•	adverse reactions in our sales channel, such as reduced shelf space or reduced online product visibility.

We depend substantially on our sales channel, and our failure to maintain and expand our sales channel would result in lower sales and reduced net revenue.

     To maintain and grow our market share, net revenue and brand, we must maintain and expand our sales channel. We sell our products through our sales channel, which consists of traditional retailers, on-line retailers, direct market resellers, or DMRs, value added resellers, or VARs, and, recently, broadband service providers. These entities typically purchase our products through our wholesale distributors. We sell to small businesses primarily through DMRs, VARs and retail locations, and we sell to our home users primarily through retail locations, online retailers and broadband service providers. We have no minimum purchase commitments or long-term contracts with any of these third parties.

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     Traditional retailers have limited shelf space and promotional budgets, and competition is intense for these resources. A competitor with more extensive product lines and stronger brand identity, such as Microsoft or Cisco Systems, may have greater bargaining power with these retailers. The competition for retail shelf space may increase, which would require us to increase our marketing expenditures simply to maintain current levels of retail shelf space. The recent trend in the consolidation of online retailers and DMR channels has resulted in intensified competition for preferred product placement, such as product placement on an online retailer’s home page. Expanding our presence in the VAR channel may be difficult and expensive. We compete with established companies that have longer operating histories and longstanding relationships with VARs that we would find highly desirable as sales channel partners. If we were unable to maintain and expand our sales channel, our growth would be limited and our business would be harmed.

     We must also continuously monitor and evaluate emerging sales channels. If we fail to establish a presence in an important developing sales channel, such as selling networking products through broadband service providers such as cable operators and telecommunications carriers, our business could be harmed.

We rely on a limited number of wholesale distributors and direct customers for most of our sales, and if they refuse to pay our requested prices or reduce their level of purchases, our net revenue could decline.

     We sell a substantial portion of our products through wholesale distributors, including Ingram Micro, Inc. and Tech Data Corporation. During 2002,2003, sales to Ingram Micro and its affiliates accounted for 32%31% of our net revenue and sales to Tech Data and its affiliates accounted for 20%15% of our net revenue. We expect that a significant portion of our net revenue will continue to come from sales to a small number of wholesale

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If we do not effectively manage our sales channel inventory and product mix, we may incur costs associated with excess inventory, or lose sales from having too few products.

     If we are unable to properly monitor, control and manage our sales channel inventory and maintain an appropriate level and mix of products with our wholesale distributors and within our sales channel, we may incur increased and unexpected costs associated with this inventory. We currently have particularly limited visibility as to the inventory levels of our international wholesale distributors and sales channel. We generally allow wholesale distributors and traditional retailers to return a limited amount of our products in exchange for other products. Under our price protection policy, if we reduce the list price of a product, we are often required to issue a credit in an amount equal to the reduction for each of the products held in inventory by our wholesale distributors and retailers. If our wholesale distributors and retailers are unable to sell their inventory in a timely manner, we might lower the price of the products, or these parties may exchange the products for newer products. If we improperly forecast demand for our products we could end up with too many products and be unable to sell the excess inventory in a timely manner, if at all, or, alternatively we could end up with too few products and not be able to satisfy demand. This problem is exacerbated because we attempt to closely match inventory levels with product demand leaving limited margin for error. If these events occur, we could incur increased expenses associated with writing off excessive or obsolete inventory or lose sales and therefore suffer declining gross margins.

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We depend on a limited number of third-party contract manufacturers for substantially all of our manufacturing needs. If these contract manufacturers experience any delay, disruption or quality control problems in their operations, we could lose market share and our brand may suffer.

     All of our products are manufactured, assembled, tested and packaged by a limited number of original design manufacturers, or ODMs, and original equipment manufacturers, or OEMs. In recent years, mostSubstantially all of our products have beenare manufactured by Ambit Microsystems, Cameo Communications Corporation, Delta Networks, Inc., Cameo Communications Corporation, Lite-On Technology Corporation, SerComm Corporation and Z-Com, Inc. We rely on our contract manufacturers to procure components and, in some cases, subcontract engineering work. Some of our products are manufactured by a single contract manufacturer. We do not have any long-term contracts with any of our third-party contract manufacturers. Some of these third-party contract manufacturers produce products for our competitors. The loss of the services of any of our primary third-party contract manufacturers could cause a significant disruption in operations and delays in product shipments. Qualifying a new contract manufacturer and commencing volume production is expensive and time consuming.

     Our reliance on third-party contract manufacturers also exposes us to the following risks over which we have limited control:

	•	unexpected increases in manufacturing and repair costs;
	•	inability to control the quality of finished products;
	•	inability to control delivery schedules; and
	•	potential lack of adequate capacity to manufacture all or a part of the products we require.

     All of our products must satisfy safety and regulatory standards and some of our products must also receive government certifications. Our ODM and OEM contract manufacturers are primarily responsible for

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If we are unable to provide our third-party contract manufacturers an accurate forecast of our component and material requirements, we may experience delays in the manufacturing of our products and the costs of our products may increase.

     We provide our third-party contract manufacturers with a rolling forecast of demand, which they use to determine our material and component requirements. Lead times for ordering materials and components vary significantly and depend on various factors, such as the specific supplier, contract terms and demand and supply for a component at a given time. Some of our components have long lead times, such as local access network repeaters, switching fabric chips, physical layer transceivers, connector jacks and metal and plastic enclosures. If our forecasts are less than our actual requirements, our contract manufacturers may be unable to manufacture products in a timely manner. If our forecasts are too high, our contract manufacturers will be unable to use the components they have purchased on our behalf. The cost of the components used in our products tends to drop rapidly as volumes increase and the technologies mature. Therefore, if our contract manufacturers are unable to promptly use components purchased on our behalf, our cost of producing products may be higher than our competitors due to an over supply of higher-priced components. Moreover, if they are unable to use components ordered at our direction, we will need to reimburse them for any losses they incur.

If disruptions in our transportation network occur or our shipping costs substantially increase, we may be unable to sell our products and our operating expenses could increase.

     We are highly dependent upon the transportation systems we use to ship our products, including surface and air freight. Our attempts to closely match our inventory levels to our product demand intensifiesintensify the need for our transportation systems to function effectively and without delay. The transportation network is subject

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We obtain several key components from limited or sole sources, and if these sources fail to satisfy our supply requirements, we may lose sales and experience increased component costs.

     Any shortage or delay in the supply of key product components would harm our ability to meet scheduled product deliveries. Many of the semiconductors used in our products are specifically designed for use in our products and are obtained from sole source suppliers on a purchase order basis. In addition, some components that are used in all our products are obtained from limited sources. These components include connector jacks, plastic casings and physical layer transceivers. We also obtain switching fabric semiconductors, which are used in our Ethernet switches and Internet gateway products, from a limited number of suppliers. Our contract manufacturers purchase these components on our behalf on a purchase

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We rely upon third parties for technology that is critical to our products, and if we are unable to continue to use this technology and future technology, our ability to sell technologically advanced products would be limited.

     We rely on third parties to obtain non-exclusive patented hardware and software license rights in technologies that are incorporated into and necessary for the operation and functionality of our products. Because the intellectual property we license is available from third parties, barriers to entry may be lower than if we owned exclusive rights to the technology we license and use. On the other hand, if a competitor or potential competitor enters into an exclusive arrangement with any of our key third-party technology providers, our ability to develop and sell products containing that technology would be severely limited. Our licenses often require royalty payments or other consideration to third parties. Our success will depend in part on our continued ability to have access to these technologies, and we do not know whether these third-party technologies will continue to be licensed to us on commercially reasonableacceptable terms or at all. If we are unable to license the necessary technology, we may be forced to acquire or develop alternative technology of lower quality or performance standards. This would limit and delay our ability to offer competitive products and increase our costs of production. As a result, our margins, market share, and operating results could be significantly harmed.

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If we are unable to secure and protect our intellectual property rights, our ability to compete could be harmed.

     We rely upon third parties for a substantial portion of the intellectual property we use in our products. ForAt the intellectual property we own,same time, we rely on a combination of copyright, trademark, patent and trade secret laws, nondisclosure agreements with employees, consultants and suppliers and other contractual provisions to establish, maintain and protect our intellectual proprietary rights. Despite our efforts to protect our intellectual property, unauthorized third parties may attempt to design around, copy aspects of our product design or to obtain and use technology andor other intellectual property that we regard as proprietary.associated with our products. For example, one of our primary intellectual property assets is the NETGEAR name, trademark and logo. We may be unable to stop third parties from adopting similar names, trademarks and logos, especially in those international markets where our intellectual property rights may be less protected. Furthermore, our competitors may independently develop similar technology or duplicate our intellectual property. In addition, the technology and other intellectual property incorporated into or related toassociated with our products may infringe upon intellectual property rights owned by third parties.products. Our inability to secure and protect our proprietaryintellectual property rights could significantly harm our brand and our business, operating results and financial condition.

We could become subject to litigation, including litigation regarding intellectual property rights, which could be costly and subject us to significant liability.

     The networking industry is characterized by the existence of a large number of patents and frequent claims and related litigation regarding patent,infringement of patents, trade secretsecrets and other intellectual property rights. In particular, leading companies in the data communications markets, some of which are competitors, have extensive patent portfolios with respect to networking technology. From time to time, third parties,

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If our products contain defects or errors, we could incur significant unexpected expenses, experience product returns and lost sales, suffer damage to our brand and reputation, and be subject to product liability or other claims.

     Our products are complex and may contain defects, errors or failures, particularly when first introduced or when new versions are released. For example, in the quarter ended September 29, 2002, we recalled some of our 48 port 10/100 Mbps Ethernet switches due to an intermittent connectivity issue with a connector. Some errors and defects may be discovered only after a product has been installed and used by the end user. If our products contain defects or errors, we could experience decreased sales and increased product returns, loss of customers and market share, and increased service, warranty and insurance costs. In addition, our reputation and brand could be damaged, and we could face legal claims regarding our products. A successful product liability or other claim could result in negative publicity and further harm our reputation, result in unexpected expenses and adversely impact our operating results.

We intend to implement an international restructuring, which may strain our resources and increase our operating expenses.

     By the end of 2004, we plan to reorganize foreign subsidiaries and entities to manage and optimize our international operations. Our implementation of this project will require substantial efforts by our staff and could result in increased staffing requirements and related expenses. Failure to successfully execute the restructuring or other factors outside our control could negatively impact the timing and extent of any benefit we receive from the restructuring. The restructuring will also require us to amend a number of our customer and supplier agreements, which will require the consent of our third-party customers and suppliers. In addition, there could be unanticipated interruptions in our business operations as a result of implementing these changes that could result in loss or delay in revenue causing an adverse effect on our financial results.

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We intend to expand our operations and infrastructure, which may strain our operations and increase our operating expenses.

     We intend to expand our operations and pursue market opportunities domestically and internationally to grow our sales. For example, we are intensifying our efforts to sell our products in China.China, Italy, Japan, Spain and Sweden. We expect that this expansion will strain our existing management information systems, and operational and financial controls. In addition, as we continue to grow, our expenditures will likely be significantly higher than our historical costs. We may not be able to install adequate controls in an efficient and timely manner as our business grows, and our current systems may not be adequate to support our future operations. The difficulties associated with installing and implementing these new systems, procedures and controls may place a significant burden on our management, operational and financial resources. In addition, as we grow internationally, we will have to expand and enhance our communications infrastructure. If we fail to continue to improve our management information systems, procedures and financial controls or encounter unexpected difficulties during expansion, our business could be harmed.

Our sales and operations in international markets expose us to operational, financial and regulatory risks.

     International sales comprise a significant amount of our overall net revenue. International sales were 33% of our net revenue in 2000, 37% in each of 2001 and 2002 and 46%42% in the quarter ended March 30, 2003. We anticipate that international sales may grow as a percentage of net revenue. We have committed resources to expanding our international operations and sales channels and these efforts may not be successful. International sales are subject to a number of risks. For example, we recognize revenue from our international sales when our products reach the country of destination. As a result, if these products are delayed in transit, we are unable to recognize revenue.

     International operations are subject to a number of other risks, including:

	•	political and economic instability, international terrorism and anti-American sentiment, particularly in emerging markets;
	•	preference for locally branded products, and laws and business practices favoring local competition;
	•	exchange rate fluctuations;
	•	increased difficulty in managing inventory;
	•	delayed revenue recognition;
	•	less effective protection of intellectual property; and
	•	difficulties and costs of staffing and managing foreign operations.

     The recent outbreak of severe acute respiratory syndrome, or SARS, may have a negative impact on our operations. Our operations may be impacted by a number of SARS-related factors, including, but not limited

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We currently do not engage in any currency hedging transactions. Except for sales to Japan and Singapore, our foreigninternational sales are currently invoiced in United States dollars. Nonetheless, as we expand our international operations, we may alloware exploring the option of allowing both invoicing and payment in additional foreign currencies and our exposure to losses in foreign currency transactions may increase. Moreover, the costs of doing business abroad may increase as a result of adverse exchange rate fluctuations. For example, if the United States dollar declined in value relative to a local currency, we could be required to pay more for our expenditures in that market, including salaries, commissions, local operations and marketing expenses, each of which is paid in local currency. In addition, we may lose customers if exchange rate fluctuations, currency devaluations or economic crises increase the local currency price of our products or reduce our customers’ ability to purchase products.

If we lose the services of our Chairman and Chief Executive Officer, Patrick C.S. Lo, or our other key personnel, we may not be able to execute our business strategy effectively.

     Our future success depends in large part upon the continued services of our key technical, sales, marketing and senior management personnel. In particular, the services of Patrick C.S. Lo, our Chairman and Chief Executive Officer, who has leadled our company since its inception, are very important to our business. All

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Natural disasters, mischievous actions or terrorist attacks could delay our ability to receive or ship our products, or otherwise disrupt our business.

     Our corporate headquarters are located in Northern California and one of our warehouses is located in Southern California, regions known for seismic activity. In addition, substantially all of our manufacturing occurs in a geographically concentrated area in mainland China, where disruptions from natural disasters, health epidemics and political, social and economic instability may affect the region. If our manufacturers or warehousing facilities are disrupted or destroyed, we would be unable to distribute our products on a timely basis, which could harm our business. Moreover, if our computer information systems or communication systems, or those of our vendors or customers, are subject to disruptive hacker attacks or other disruptions, our business could suffer. We have not established a formal disaster recovery plan. Our back-up operations may be inadequate and our business interruption insurance may not be enough to compensate us for any losses that may occur. A significant business interruption could result in losses or damages and harm our business. For example, much of our order fulfillment process is automated and the order information is stored on our servers. If our computer systems and servers go down even for a short period at the end of a fiscal quarter, our ability to recognize revenue would be delayed until we were again able to process and ship our orders, which could cause our stock price to decline significantly.

Risks Related to this Offering

Our stock price may be volatile and your investment in our common stock could suffer a decline in value.

     With the current uncertainty about economic conditions in the United States, there has been significant volatility in the market price and trading volume of securities of technology and other companies, which may be unrelated to the financial performance of these companies. These broad market fluctuations may negatively affect the market price of our common stock.

     Some specific factors that may have a significant effect on our common stock market price include:

	•	actual or anticipated fluctuations in our operating results or our competitors’ operating results;
	•	actual or anticipated changes in our growth rates or our competitors’ growth rates;
	•	conditions in the financial markets in general or changes in general economic conditions;
	•	our ability to raise additional capital; and
	•	changes in stock market analyst recommendations regarding our common stock, other comparable companies or our industry generally.

The large number of shares eligible for public sale could cause our stock price to decline.

     A small number of stockholders own a substantial number of shares of our stock. Many of our largest holders will have rights, subject to some conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. Moreover, substantially all of the common stock issued upon exercise of options under our stock option plans and employee stock purchase plan can be freely sold in the public market. If any of these holders cause a large number of securities to be sold in the public market, the sales could reduce the trading price of our common stock. These sales also could impede our ability to raise future capital. Please see “Shares Eligible for Future Sale” for a description of sales that may occur in the future.

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Concentration of ownership among our existing executive officers, directors and principal stockholders may prevent new investors from influencing significant corporate decisions and may result in a lower trading price for our stock than if ownership of our stock was less concentrated.

     Upon completion of this offering, our executive officers, directors and principal stockholders will beneficially own, in total, approximately 67.8%34.9% of our outstanding common stock. As a result, these stockholders, acting together, willcould have the ability to exert substantial influence over all matters requiring approval by our stockholders, including the election and removal of directors and any proposed merger, consolidation or sale of all or substantially all of our assets and other corporate transactions. This concentration of control could be disadvantageous to other stockholders with interests different from those of our officers, directors and principal stockholders. For example, our officers, directors and principal

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The large numberSome provisions of shares eligible for public sale after this offering could cause our stock price to decline.charter and by-laws may delay or prevent transactions that many stockholders may favor, and may have the effect of entrenching management.

     Our current stockholders hold a substantial number of sharesSome provisions of our common stockcertificate of incorporation and by-laws may discourage, delay or prevent a merger or acquisition that they will be able to sellour stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions include:

	•	authorization of the issuance of “blank check” preferred stock without the need for stockholder approval;
	•	elimination of the ability of stockholders to call special meetings of stockholders or act by written consent; and
	•	advance notice requirements for proposing matters that can be acted on by stockholders at stockholder meetings.

     In addition, some provisions of Delaware law may also discourage, delay or prevent someone from acquiring us or merging with us. Such provisions of Delaware law and the public market in the near future. A significant portion of these shares are held by a small number of stockholders. Sales by our current stockholders of a substantial number of shares after this offering could significantly reduce the market priceprovisions of our common stock. Moreover, aftercertificate of incorporation may have the effect of entrenching management by making it more difficult to remove directors. See the section of this offering, the holdersprospectus entitled “Description of approximately 20,228,480 shares of common stock, consisting of shares issued upon conversionCapital Stock — Certain Provisions of our preferred stock, will have rights, subject to some conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may fileCertificate of Incorporation and Bylaws and Delaware Anti-Takeover Law” for ourselves or other stockholders. We also intend to register all common stock that we may issue under our stock option plans and employee stock purchase plan. Once we registermore detailed information regarding these shares, they can be freely sold in the public market upon issuance, subject to the lock-up agreements described in “Underwriting.” If any of these holders cause a large number of securities to be sold in the public market, the sales could reduce the trading price of our common stock. These sales also could impede our ability to raise future capital. Please see “Shares Eligible for Future Sale” for a description of sales that may occur in the future.provisions.

We may apply the proceeds of this offering to uses that do not improve our operating results or increase the value of your investment.

     Upon the closing of this offering we intend to use $20.0 million to repay debt owed to Nortel Networks. We will have broad discretion in how we use the remaining proceeds from this offering, and we may spend these proceeds in ways that do not improve our operating results or increase the value of your investment. You may not have the opportunity to evaluate the economic, financial or other information on which we base our decisions regarding how to use the proceeds from this offering.

Purchasers in this offering will experience immediate and substantial dilution in the book value of their investment.

     The initial public offering price of our common stock is substantially higher than the net tangible book value per share of our common stock immediately after this offering. Therefore, if you purchase our common stock in this offering, you will incur an immediate dilution of $7.99 in net tangible book value per share from the price you paid, based on the assumed initial offering price of $11.00 per share. The exercise of outstanding options and warrants will result in further dilution. For a further description of the dilution that you may experience immediately after this offering, please see “Dilution.”

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     This prospectus includes forward-looking statements.statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions described in “Risk Factors” and elsewhere in this prospectus, including, among other things:

	•	the future growth of the small business and home markets;
	•	our business strategies and development plans;
	•	new products and technologies;
	•	future operating expenses and financing requirements; and
	•	competition and competitive factors in the small business and home markets.

     TheseIn light of these risks, are not exhaustive. Other sections ofuncertainties and assumptions, the forward-looking events and circumstances discussed in this prospectus may include additional factors which could adversely impact our businessnot occur and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results tocould differ materially from those containedanticipated or implied in anythe forward-looking statements.

     You should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

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USE OF PROCEEDS

     We estimate thatwill not receive any of the net proceeds from the sale of the shares of our common stock in this offering other than reimbursement of certain out-of-pocket expenses of the offering. The selling stockholders will be approximately $69.4 million or approximately $80.2 million if the underwriters exercise their over-allotment option in full, based on the assumed initial public offering price of $11.00 per share, after deducting the underwriting discount and estimated offering expenses payable by us.

     We do not have any specific plans or proposals for the allocationreceive all of the net proceeds from this offering, other than using $20.0 millionoffering. We anticipate the selling stockholders will bear substantially all of the net proceeds from this offeringout-of-pocket expenses of the offering.

MARKET PRICE OF COMMON STOCK

Our common stock has been quoted on the Nasdaq National Market under the symbol “NTGR” since July 31, 2003. Prior to repaythat time, there was no public market for our outstanding subordinated unsecured convertible promissory note payable to Nortel Networks.common stock. The Nortel note would accrue interest at a ratefollowing table sets forth for the indicated periods the high and low sales prices of 7% per year beginningour common stock on February 7, 2005 and would become due and payable on February 7, 2009.the Nasdaq National Market.

     On March 5, 2004, there were approximately 58 stockholders of record.

STOCK PERFORMANCE GRAPH

     The Nortel note would accelerate and become due and payable, at Nortel’s option, upon ourfollowing graph compares the change in control, as defined in the Nortel note.cumulative total stockholder return on NETGEAR’s common stock during the period from July 31, 2003, the date on which our stock commenced trading on the Nasdaq National Market, through February 20, 2004, with the cumulative total return on the Nasdaq Market Index and the Nasdaq Computer Index. The Nortel note also becomes due and payable, to the extent provided in the Nortel note, upon equity financings such as this offering.comparison assumes reinvestment of dividends, if any.

     We expect to use the remainder of the net proceeds from this offering for general corporate purposes, including:ASSUMES $100 INVESTED ON JULY 31, 2003

Notes:

	•A.	working capital;The Index level for all series was set to 100.00 on July 31, 2003.

	•B.	sales and marketing expenses;
	•	research and development expenses;
	•	general and administrative expenses;
	•	capital expenditures; and
	•	possible joint ventures with, investmentsThe stock price performance shown on the table is not necessarily indicative of future performance. Information used on the graph was obtained from the Nasdaq.com website, a source management believes to be reliable, but we are not responsible for any errors or omissions in or acquisitions of businesses, products or technologies that complement our business.such information.

Although we may use a portion of the net proceeds to enter into joint ventures, investments or acquisitions with respect to businesses, products or technologies that are complementary to our business, we have no current plans in this regard. Pending such uses, we plan to invest the net proceeds in short-term investment grade, interest-bearing securities.

DIVIDEND POLICY

     We have never declared or paid cash dividends on our capital stock. Westock and we currently intend to retain future earnings, if any, to finance the operation and expansion of our business. Therefore,business and we do not anticipate paying cash dividends on our capital stock in the foreseeable future. In addition, if we were to borrow against our existing credit facility, we would be prohibited from paying cash dividends.

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CAPITALIZATION

     The following table summarizes our capitalization as of March 30, 2003:

	•	on an actual basis;
	•	on a pro forma basis to reflect the conversion of all outstanding shares of redeemable convertible preferred stock on a 1-for-1 basis into 20,228,480 shares of common stock upon the closing of this offering; and
	•	on a pro forma as adjusted basis to give effect to receipt of the net proceeds from the sale by us in this offering of 7,000,000 shares of common stock at an assumed initial public offering price of $11.00 per share, after deducting the underwriting discount and the estimated offering expenses payable by us, and the application of the net proceeds as described under “Use of Proceeds” and the repayment of the note payable to Nortel Networks as described in footnote (1) below.

December 31, 2003. You should read this table in conjunction with “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus. The following table sets forth our capitalization as of March 30, 2003:

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(1)	The $20.0 million note payable to Nortel Networks is carried at its net present value of $13.7 million as of March 30, 2003. We expect to use $20.0 million of the net proceeds from this offering to repay the Nortel note. As a result of this $20.0 million cash payment, we will incur an extinguishment of debt charge of approximately $6.3 million in the quarter in which we make the repayment.

     The table above excludes the following shares:

	•	6,436,8176,561,693 shares of common stock subject to stock options outstanding as of March 30,December 31, 2003, with a weighted average exercise price of $4.76$5.39 per share;
	•	218,750 shares of common stock subject to a warrant outstanding as of March 30, 2003, with an exercise price of $1.29 per share; and
	•	956,9331,396,412 shares of common stock available for future grant or issuance under our stock plan as of March 30,December 31, 2003; and
	•	500,000 shares of common stock available for future grant or issuance under our employee stock purchase plan as of December 31, 2003.

     We expect to complete a 1.75-for-1 split of our capital stock prior to the completion of this offering. All share amounts have been retroactively adjusted to give effect to the stock split.

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DILUTION

     If you invest in our common stock, your interest will be diluted to the extent of the difference between the public offering price per share of our common stock and the pro forma as adjusted net tangible book value per share of our common stock immediately after this offering. Pro forma net tangible book value per share represents the amount of our total tangible assets less total liabilities, divided by the pro forma number of shares of our common stock outstanding assuming the conversion of all shares of redeemable convertible preferred stock outstanding as of March 30, 2003, into 20,228,480 shares of common stock.

Investors participating in this offering will incur immediate, substantial dilution. Our pro forma net tangible book value was $18.8 million, or $0.93 per share of common stock, after giving effect to the automatic conversion of all outstanding shares of our redeemable convertible preferred stock into shares of our common stock upon the completion of this offering. Assuming the sale by us of 7,000,000 shares of common stock offered in this offering at an assumed initial public offering price of $11.00 per share, and after deducting the underwriting discount and estimated offering expenses, and assuming the repayment of a note payable to Nortel Networks, our pro forma as adjusted net tangible book value as of March 30, 2003, would have been $81.9 million, or $3.01 per share of common stock. This represents an immediate increase in pro forma net tangible book value of $2.08 per share of common stock to our existing stockholders and an immediate dilution of $7.99 per share to the new investors purchasing shares in this offering. The following table illustrates this per share dilution:

The following table sets forth on a pro forma as adjusted basis, as of March 30, 2003, the number of shares of common stock purchased from us, the total consideration paid and the average price per share paid by existing holders of common stock and by the new investors, after deducting the underwriting discount and estimated offering expenses payable by us (dollars in thousands, except per share amounts).

     If the underwriters’ over-allotment option is exercised in full, the number of shares of common stock held by existing stockholders will be reduced to 72% of the total number of shares of common stock to be outstanding after this offering; and the number of shares of common stock held by the new investors will be increased to 8,050,000 shares or 28% of the total number of shares of common stock outstanding after this offering. See “Principal Stockholders.”

     The discussion and tables above assume no exercise of the underwriters’ over-allotment option, the outstanding warrant or any outstanding stock options. As of March 30, 2003, there were 6,436,817 shares of common stock issuable upon exercise of outstanding stock options at a weighted average exercise price of $4.76 per share, and 956,933 shares available for future grant or issuance under our 2000 Stock Plan. As of March 30, 2003, there were also 218,750 shares of common stock issuable upon exercise of a warrant with an exercise price of $1.29 per share. In April 2003, our board of directors approved a new 2003 Stock Plan under which they reserved 750,000 shares for future grant or issuance and a 2003 Employee Stock Purchase

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     Following the completion of this offering, we intend to repay in full the $20.0 million subordinated unsecured convertible promissory note we issued to Nortel Networks using a portion of the proceeds from this offering. Moreover, under the terms of the Nortel note, Nortel Networks may require us to repay the note upon the completion of this offering. If we do not repay the $20.0 million promissory note, then for the two-year period following the completion of this offering Nortel Networks may convert any outstanding amounts owing under the note into shares of our common stock at the public offering price of the shares sold in this offering.

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SELECTED CONSOLIDATED FINANCIAL DATA

     SelectedThe following selected consolidated financial data for the period from January 1, 1998 to August 31, 1998 is referred to as the “Predecessor Company” information. On August 31, 1998, Nortel Networks NA Inc. acquired Bay Networks, Inc., including its ownership interestshould be read in NETGEAR,conjunction with our consolidated financial statements and related notes, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in a transaction that was accounted for using the purchase method. The selected financial data after August 31, 1998 includes the financial statement impact of recording fair value adjustments arising from the acquisition of Bay Networks.this prospectus.

     The consolidated statements of operations data for NETGEAR and its Predecessor Company for the period from January 1, 1998 to August 31, 1998, the period from September 1, 1998 to December 31, 1998 and the yearyears ended December 31, 1999,2001, 2002 and 2003 and the consolidated balance sheet data as of December 31, 1998, 19992002 and 20002003 are derived from audited consolidated financial statements not included elsewhere in this prospectus. The consolidated statements of operations data for the years ended December 31, 2000, 20011999 and 20022000, and the consolidated balance sheet data as of December 31, 20011999, 2000 and 20022001 are derived from audited consolidated financial statements not included elsewhere in this prospectus. Deloitte & Touche LLP performed the audit of the consolidated financial statements for the year ended December 31, 2000. PricewaterhouseCoopers LLP performed the audits of the consolidated financial statements as of December 31, 2001, 2002 and 20022003 and for the years then ended.

The consolidated statementaudits of operations data for the three months ended March 31, 2002 and March 30, 2003, and the consolidated balance sheet data as of March 30, 2003, are derived from our unaudited consolidated financial statements appearing elsewhere in this prospectus. We have prepared the unaudited information on the same basis as the audited consolidated statementsof December 31, 1999 and have included, in our opinion, all adjustments, consisting only of normal2000 and recurring adjustments, that we consider necessary for a fair presentation of the financial information set forth in those statements. The historical results are not necessarily indicative of the results to be expected in any future period, and the results for the three monthsyears then ended March 30, 2003 are not necessarily indicative of results to be expected for the full fiscal year or any other period.

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were performed by another independent accountant.

(1)	On January 1, 2000, we adopted Emerging Issues Task Force, or EITF, Issue 01-09, “Accounting for Consideration Given by a Vendor to a Customer or Reseller of the Vendor’s Products,” and as a

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	consequence, record cooperative marketing costs as a reduction in net revenue. Prior to January 1, 2000, it was not practical for us to determine the amount of cooperative marketing costs to record as a reduction of net revenue, and such amounts were included as sales and marketing expense.
(2)	Information regarding calculation of per share data is described in Note 4 to the consolidated financial statements.

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(3)

Pro forma basic and diluted net income per share is presented for 2002 and three months ended March 30, 2003 to reflect per share data assuming the automatic conversion of all outstanding shares of preferred stock into common stock, which will occur upon the closing of a qualified initial public offering, as if the conversion had taken place at the beginning of the year, or at the date of issuance, if later. Basic pro forma per share data for 2002 was calculated by dividing net loss attributable to common stockholders, adding back the deemed dividend on preferred stock, by 21.1 million which is the weighted average number of shares of common stock into which the preferred stock outstanding during the period was convertible. Diluted pro forma net income per share data for 2002 was calculated the same as basic pro forma net income per share except that the denominator was adjusted to 22.5 million shares to include weighted average potential common shares (representing warrants and stock options) outstanding during the period. Anti-dilutive common stock options amounting to 652,428 were excluded from the weighted average shares outstanding for the diluted per share calculation. For the three months ended March 30, 2003, pro forma basic and diluted income per share did not differ from actual basic and diluted income per share.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

     TheYou should read the following discussion should be read in conjunctionof our financial condition and results of operations together with ourthe audited consolidated financial statements and notes to the related notes that appearfinancial statements included elsewhere in this prospectus. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. ActualThe forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Our actual results andcould differ materially from the timing of events may differ significantly from those projected in suchresults contemplated by these forward-looking statements due to a number of factors, including those set forthdiscussed in the sectionsections of this prospectus entitled “Risk Factors” and elsewhere in this prospectus.“Special Note Regarding Forward-Looking Statements.”

Overview

     We design, develop and market technologically advanced, branded networking products that address the specific needs of small business and home users. We supply innovative networking products that meet the ease-of-use, quality, reliability, performance and affordability requirements of these users. From our inception in January 1996 until May 1996, our operating activities related primarily to research and development, developing relationships with outsourced design, manufacturing and technical support partners, testing prototype designs, staffing a sales and marketing organization and establishing relationships with distributors and resellers. We began product shipments during the quarter ended June 30, 1996, and recorded net revenue of $4.0 million in 1996. In 2002,2003, our net revenue was $237.3$299.3 million and our net income was $8.1 million. In the first quarter of 2003, our net revenue was $67.7 million and our net income was $1.6$13.1 million.

     We were incorporated in January 1996 as a wholly owned subsidiary of Bay Networks, Inc. to focus exclusively on providing networking solutions for small businesses and homes. In August 1998, Nortel Networks purchased Bay Networks, including its wholly owned subsidiary NETGEAR. We remained a wholly owned subsidiary of Nortel Networks until March 2000 when we sold a portion of our capital stock to Pequot Private Equity Fund II, L.P. as part of a joint effort by us and Nortel Networks to reduce Nortel Networks’ ownership interest in us. In September 2000, Nortel Networks sold a portion of its ownership interest in us to Shamrock Holdings of California, Inc., which is a related party to Shamrock Capital Growth Fund, L.P.; Blue Ridge Limited Partnership and an affiliated fund; Halyard Capital Fund, LP; The Abernathy Group Institutional HSN Fund, L.P. and an affiliated fund; and Delta International Holding Ltd. In February 2002, Nortel Networks sold its remaining ownership interest in NETGEAR to us in exchange for cash, non-cash consideration, and a $20.0 million promissory note, whichnote. In July 2003 we intendcompleted our initial public offering of common stock. We sold 8,050,000 shares of common stock at an offering price of $14.00 per share. We received net proceeds of approximately $101.8 million after deducting the underwriting discount and offering expenses payable by us. A portion of the proceeds has been used to fully repay upon the completion of this offering.$20.0 million promissory note.

     Our extensive product line currently includes approximately 100 different products. These products are available in multiple configurations to address the needs of our customers in each geographic region in which our products are sold. Our products are grouped into three major segments within the small business and home markets: Ethernet networking products, broadband products and wireless networking products. Ethernet networking products include switches, network interface cards, or NICs, and print servers. Broadband products include routers and gateways. Wireless networking products include wireless access points, wireless NICs and wireless NICs.media adapters. Since we originally launched our business in 1996 with the shipment of Ethernet networking products and a single broadband product, we have continually introduced new products in response to market demand. For example, in 2002,2003, we introduced approximately 4048 new products.

     Our products are sold through multiple sales channels worldwide, including traditional retailers, online retailers, direct market resellers, or DMRs, value added resellers, or VARs, and recently, broadband service providers. Our retail channel includes traditional retail locations domestically and internationally, and online retailers, such as Amazon.com and Buy.com. We sell directly to Best Buy, Circuit City, CompUSA, Costco, Fry’s Electronics, Staples, Office Depot, MediaMarkt (Germany, Austria), PC World (U.K.) and Staples. The remaining traditionalFNAC (France). Online retailers include Amazon.com and Buy.com. Our direct market

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