NETGEAR (NTGR) 8-K Netgear® Reports Record Third Quarter 2011 Results

Exhibit 99.1

NETGEAR^® REPORTS RECORD THIRD QUARTER 2011 RESULTS

• Record third quarter 2011 net revenue of $301.8 million, as compared to $236.0 million in the comparable prior year quarter, 28% year-over-year growth

• Third quarter 2011 non-GAAP net income of $29.9 million, as compared to $16.1 million in the comparable prior year quarter, 86% year-over-year growth

• Third quarter 2011 non-GAAP diluted earnings per share of $0.79, as compared to $0.45 in the comparable prior year quarter, 76% year-over-year growth

• Company expects fourth quarter 2011 net revenue to be in the range of $300 million to $310 million, with non-GAAP operating margin in the range of 11% to 12%

SAN JOSE, California – October 27, 2011 – NETGEAR, Inc. (NASDAQGM: NTGR), a global networking company that delivers innovative products to consumers, businesses and service providers, today reported financial results for the third quarter ended October 2, 2011.

Net revenue for the third quarter ended October 2, 2011 was $301.8 million, as compared to $236.0 million for the third quarter ended October 3, 2010, and as compared to $291.2 million in the second quarter ended July 3, 2011. Net income, computed in accordance with GAAP, for the third quarter of 2011 was $26.7 million, or $0.70 per diluted share. This compared to GAAP net income of $13.1 million, or $0.36 per diluted share, for the third quarter of 2010, and to GAAP net income of $20.6 million, or $0.54 per diluted share, in the second quarter of 2011.

Gross margin on a non-GAAP basis in the third quarter of 2011 was 32.4%, as compared to 32.7% in the year ago comparable quarter, and 31.7% in the second quarter of 2011. Non-GAAP operating margin was 12.5% in the third quarter of 2011, as compared to 11.0% in the third quarter of 2010, and 11.9% in the second quarter of 2011. Non-GAAP net income was $0.79 per diluted share in the third quarter of 2011, as compared to non-GAAP net income of $0.45 per diluted share in the third quarter of 2010, and non-GAAP net income of $0.65 per diluted share in the second quarter of 2011.

The differences between GAAP and non-GAAP financial measures include adjustments, net of any tax effect, for amortization of purchased intangibles, stock-based compensation, restructuring charges, acquisition related compensation and transitional expenses, impact to cost of sales from acquisition accounting adjustments to inventory, and litigation reserves. The accompanying schedules provide a reconciliation of financial measures computed on a GAAP basis to financial measures computed on a non-GAAP basis.

Patrick Lo, Chairman and Chief Executive Officer of NETGEAR commented, “We are extremely pleased with our Q3 2011 financial performance amid a challenging macroeconomic environment. Despite the uncertainty in Europe, we were able to achieve record revenue, profit and EPS, based on our strength in new product innovation and distribution. We are particularly pleased with our 9% sequential revenue growth in Europe and our double digit sequential revenue growth worldwide in our Retail and Commercial businesses. Our European retail consumer business was led by an uptake in home networking products, following the trend in the U.S., as more tablets and WiFi enabled devices are being used at home. Our strength in the commercial business was led by the strong market reception of our switches with 10 Gigabit or Power over Ethernet capabilities, and our innovative Plus switches which are manageable via simple PC utility software.”

“Our Retail Business Unit revenue was up 18% sequentially, and up 10% over the prior year quarter, while the Commercial Business Unit revenue was up 18% sequentially, and up 21% over the prior year quarter. As expected, the Service Provider Business Unit revenue was down 21% sequentially, reflective of a one-time order from a major service provider in the previous quarter. On a year-over-year basis, service provider revenue was up 85%.”

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“We introduced another 22 new exciting products in the third quarter 2011 as we continue to build on our new product momentum. Notable new products include: the industry’s first 900 Megabits per second WiFi router; the new WiFi router with ReadySHARE^® Cloud storage which enables smartphone access to content stored on USB drives at home; the NETGEAR NeoTV™ Player which streams Netflix, Vudu, YouTube and many other online content sources to TVs; the Universal Push2TV^® which transposes any laptop screen display wirelessly to a TV; the NETGEAR ProSecure^® UTM9S, the industry’s first Unified Threat Management (UTM) gateway with both vDSL and WiFi capability, and the 52 port high density Power over Ethernet Smart switch.”

Christine Gorjanc, Chief Financial Officer of NETGEAR, said, “We ended the third quarter of 2011 with $321.1 million in cash, cash equivalents and short-term investments driven by a record quarter of cash flow from operations of $43.2 million. Our net inventory ended at $136.0 million, with 6.0 turns, and DSO’s of 66 days in the third quarter 2011 remained at the low end of our historical range of 65 to 75 days. Additionally, our tax rate in the third quarter 2011 reflects a one-time benefit which accounts for an incremental $0.09 per diluted share of earnings.”

Looking forward, Mr. Lo added, “Our success through turbulent economic times has been driven by product innovation and we will continue to focus on new product introductions in the fourth quarter 2011 with another 20 new products expected. We are cautiously optimistic on holiday sales in both North America and Europe. Specifically, for the fourth quarter of 2011, we expect net revenue in the range of approximately $300 million to $310 million, with non-GAAP operating margin to be in the range of 11% to 12%.”

Investor Conference Call / Webcast Details

NETGEAR will review the third quarter 2011 results and discuss management’s expectations for the fourth quarter of 2011 today, Thursday, October 27, 2011 at 5 p.m. EDT (2 p.m. PDT). The dial-in number for the live audio call is (201) 689-8471. A live webcast of the conference call will be available on NETGEAR’s website at http://investor.netgear.com. A replay of the call will be available 2 hours following the call through midnight EDT (9 p.m. PDT) on Thursday, November 3, 2011 by telephone at (858) 384-5517 and via the web at http://investor.netgear.com. The account number to access the phone replay is 380966.

About NETGEAR, Inc.

NETGEAR (NASDAQGM: NTGR) is a global networking company that delivers innovative products to consumers, businesses and service providers. For consumers, the company makes high performance, dependable and easy to use home networking, storage and digital media products to connect people with the Internet and their content and devices. For businesses, NETGEAR provides networking, storage and security solutions without the cost and complexity of Big IT. The company also supplies top service providers with retail proven, whole home solutions for their customers. NETGEAR products are built on a variety of proven technologies such as wireless, Ethernet and powerline, with a focus on reliability and ease-of-use. NETGEAR products are sold in approximately 27,500 retail locations around the globe, and through more than 37,000 value-added resellers. The company’s headquarters are in San Jose, Calif., with additional offices in 25 countries. NETGEAR is an ENERGY STAR partner. More information is available at http://investor.netgear.com or by calling (408) 907-8000. Connect with NETGEAR at http://twitter.com/NETGEAR and http://www.facebook.com/NETGEAR.

^© 2011 NETGEAR, Inc. NETGEAR, the NETGEAR logo, ReadySHARE, NeoTV, Push2TV and ProSecure are trademarks or registered trademarks of NETGEAR, Inc. in the United States and/or other countries. Other brand and product names are trademarks or registered trademarks of their respective holders. The information contained herein is subject to change without notice. NETGEAR shall not be liable for technical or editorial errors or omissions contained herein. All rights reserved.

Contact:

Joseph Villalta

The Ruth Group

(646) 536-7003

jvillalta@theruthgroup.com

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Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 for NETGEAR, Inc.:

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. The words “anticipate”, “expect”, “believe”, “will”, “may”, “should”, “estimate”, “project”, “outlook”, “forecast” or other similar words are used to identify such forward-looking statements. However, the absence of these words does not mean that the statements are not forward-looking. The forward-looking statements represent NETGEAR, Inc.’s expectations or beliefs concerning future events based on information available at the time such statements were made and include statements, among others, regarding NETGEAR’s expected revenue and operating margin , our ability and intent to launch new product offerings and continue product development efforts, current and future demand for the Company’s existing and anticipated new products, our outlook for holiday sales for the 2011 holiday season, and our expectation of an increase in revenue for the fourth quarter of 2011. These statements are based on management’s current expectations and are subject to certain risks and uncertainties, including, without limitation, the following: future demand for the Company’s products may be lower than anticipated; consumers may choose not to adopt the Company’s new product offerings or adopt competing products; product performance may be adversely affected by real world operating conditions; the Company may be unsuccessful or experience delays in manufacturing and distributing its new and existing products; telecommunications service providers may choose to slow their deployment of the Company’s products or utilize competing products; the Company may be unable to collect receivables as they become due; the Company may fail to manage costs, including the cost of developing new products and manufacturing and distribution of its existing offerings; the Company may fail to successfully continue to effect operating expense savings; 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; changes in the level of NETGEAR’s cash resources and the Company’s planned usage of such resources; changes in the Company’s stock price and developments in the business that could increase the Company’s cash needs, fluctuations in foreign exchange rates, and the actions and financial health of the Company’s customers. Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Further information on potential risk factors that could affect NETGEAR and its business are detailed in the Company’s periodic filings with the Securities and Exchange Commission, including, but not limited to, those risks and uncertainties listed in the section entitled “Part II - Item 1A. Risk Factors,” pages 46 through 63, in the Company’s Quarterly Report on Form 10-Q for the quarter ended July 3, 2011, filed with the Securities and Exchange Commission on August 9, 2011. NETGEAR undertakes no obligation to release publicly any revisions to any forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Use of Non-GAAP Financial Information:

To supplement our consolidated financial statements presented on a GAAP basis, NETGEAR uses non-GAAP financial measures, which are adjusted to exclude certain expenses and tax benefits, where applicable. We believe non-GAAP financial measures are appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our current period GAAP results are made with the intent of providing both management and investors a more complete understanding of NETGEAR’s underlying operational results and trends and our marketplace performance. For example, the non-GAAP results are an indication of our baseline performance before charges that are considered by management to be outside of our core operating results. In addition, these adjusted non-GAAP results are among the primary indicators management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial measures prepared in accordance with generally accepted accounting principles in the United States.

-Financial Tables Attached-

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NETGEAR, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	October 2, 2011			December 31, 2010
ASSETS
Current assets:
Cash and cash equivalents	$	174,278		$	126,173
Short-term investments		146,781			144,564
Accounts receivable, net		218,653			226,731
Inventories		135,963			127,394
Deferred income taxes		21,020			19,332
Prepaid expenses and other current assets		29,919			23,850
Total current assets		726,614			668,044
Property and equipment, net		16,079			17,503
Intangibles, net		22,034			6,241
Goodwill		85,944			74,198
Other non-current assets		13,617			14,335
Total assets	$	864,288		$	780,321
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	75,672		$	89,155
Accrued employee compensation		23,190			24,130
Other accrued liabilities		107,826			110,413
Deferred revenue		23,934			27,538
Income taxes payable		—			3,487
Total current liabilities		230,622			254,723
Non-current income taxes payable		18,685			19,719
Other non-current liabilities		5,150			5,443
Total liabilities		254,457			279,885
Stockholders’ equity:
Common stock		38			36
Additional paid-in capital		358,162			316,108
Cumulative other comprehensive income (loss)		(14	)		281
Retained earnings		251,645			184,011
Total stockholders’ equity		609,831			500,436
Total liabilities and stockholders’ equity	$	864,288		$	780,321

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NETGEAR, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

	Three months ended									Nine months ended
	October 2,			July 3,			October 3,			October 2,			October 3,
	2011			2011			2010			2011			2010
Net revenue	$	301,800		$	291,240		$	236,017		$	871,863		$	643,521
Cost of revenue		205,490			200,863			160,310			597,390			425,428
Gross profit		96,310			90,377			75,707			274,473			218,093
Operating expenses:
Research and development		12,738			11,350			10,564			35,102			29,814
Sales and marketing		39,600			39,036			34,069			115,284			95,216
General and administrative		10,851			10,548			9,358			31,044			26,697
Restructuring and other charges		—			2,094			(8	)		2,094			(76	)
Litigation reserves, net		44			(225	)		—			(234	)		211
Total operating expenses		63,233			62,803			53,983			183,290			151,862
Income from operations		33,077			27,574			21,724			91,183			66,231
Interest income		115			106			132			350			302
Other income (expense), net		(267	)		(341	)		(326	)		(938	)		(388	)
Income before income taxes		32,925			27,339			21,530			90,595			66,145
Provision for income taxes		6,178			6,742			8,435			22,062			28,858
Net income	$	26,747		$	20,597		$	13,095		$	68,533		$	37,287
Net income per share:
Basic	$	0.71		$	0.56		$	0.37		$	1.85		$	1.06
Diluted	$	0.70		$	0.54		$	0.36		$	1.81		$	1.04
Weighted average shares outstanding used to compute net income per share:
Basic		37,483			37,017			35,441			36,967			35,218
Diluted		38,080			37,968			36,009			37,812			35,891
Stock-based compensation expense was allocated as follows:
Cost of revenue	$	259		$	243		$	202		$	737		$	708
Research and development		606			606			556		$	1,873			1,709
Sales and marketing		1,264			1,384			1,134		$	3,949			3,539
General and administrative		1,325			1,275			1,055		$	3,775			3,255

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NETGEAR, INC.

NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Excluding amortization of purchased intangibles, stock-based compensation, restructuring, acquisition related compensation, impact to cost of sales from acquisition accounting adjustments to inventory, and litigation reserves, net of tax.

(In thousands, except per share data)

(Unaudited)

	Three months ended									Nine months ended
	October 2,			July 3,			October 3,			October 2,			October 3,
	2011			2011			2010			2011			2010
Net revenue	$	301,800		$	291,240		$	236,017		$	871,863		$	643,521
Cost of revenue		204,167			198,822			158,764			592,434			420,750
Gross profit		97,633			92,418			77,253			279,429			222,771
Operating expenses:
Research and development		12,132			10,724			9,988			33,189			27,439
Sales and marketing		38,336			37,652			32,935			111,335			91,677
General and administrative		9,526			9,273			8,303			27,269			23,442
Total operating expenses		59,994			57,649			51,226			171,793			142,558
Income from operations		37,639			34,769			26,027			107,636			80,213
Interest income		115			106			132			350			302
Other income (expense), net		(267	)		(341	)		(326	)		(938	)		(388	)
Income before income taxes		37,487			34,534			25,833			107,048			80,127
Provision for income taxes		7,561			9,873			9,747			28,300			33,254
Net income	$	29,926		$	24,661		$	16,086		$	78,748		$	46,873
Net income per share:
Basic	$	0.80		$	0.67		$	0.45		$	2.13		$	1.33
Diluted	$	0.79		$	0.65		$	0.45		$	2.08		$	1.31
Weighted average shares outstanding used to compute net income per share:
Basic		37,483			37,017			35,441			36,967			35,218
Diluted		38,080			37,968			36,009			37,812			35,891

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NETGEAR, INC.

RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES

(In thousands, except per share data)

(Unaudited)

STATEMENT OF OPERATIONS DATA:

	Three months ended									Nine months ended
	October 2,			July 3,			October 3,			October 2,			October 3,
	2011			2011			2010			2011			2010
GAAP gross profit	$	96,310		$	90,377		$	75,707		$	274,473		$	218,093
Amortization of intangible assets		1,064			1,189			1,344			3,610			3,970
Stock-based compensation expense		259			243			202			737			708
Impact to cost of sales from acquisition accounting adjustments to inventory		—			609			—			609			—
Non-GAAP gross profit	$	97,633		$	92,418		$	77,253		$	279,429		$	222,771
Non-GAAP gross margin		32.4	%		31.7	%		32.7	%		32.0	%		34.6	%
GAAP research and development	$	12,738		$	11,350		$	10,564		$	35,102		$	29,814
Stock-based compensation expense		(606	)		(606	)		(556	)		(1,873	)		(1,709	)
Acquisition related compensation		—			(20	)		(20	)		(40	)		(666	)
Non-GAAP research and development	$	12,132		$	10,724		$	9,988		$	33,189		$	27,439
GAAP sales and marketing	$	39,600		$	39,036		$	34,069		$	115,284		$	95,216
Stock-based compensation expense		(1,264	)		(1,384	)		(1,134	)		(3,949	)		(3,539	)
Non-GAAP sales and marketing	$	38,336		$	37,652		$	32,935		$	111,335		$	91,677
GAAP general and administrative	$	10,851		$	10,548		$	9,358		$	31,044		$	26,697
Stock-based compensation expense		(1,325	)		(1,275	)		(1,055	)		(3,775	)		(3,255	)
Non-GAAP general and administrative	$	9,526		$	9,273		$	8,303		$	27,269		$	23,442
GAAP total operating expenses	$	63,233		$	62,803		$	53,983		$	183,290		$	151,862
Stock-based compensation expense		(3,195	)		(3,265	)		(2,745	)		(9,597	)		(8,503	)
Restructuring and other charges		—			(2,094	)		8			(2,094	)		76
Acquisition related compensation		—			(20	)		(20	)		(40	)		(666	)
Litigation reserves, net		(44	)		225			—			234			(211	)
Non-GAAP total operating expenses	$	59,994		$	57,649		$	51,226		$	171,793		$	142,558

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NETGEAR, INC.

RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED)

(In thousands, except per share data)

(Unaudited)

STATEMENT OF OPERATIONS DATA (CONTINUED):

	Three months ended									Nine months ended
	October 2,			July 3,			October 3,			October 2,			October 3,
	2011			2011			2010			2011			2010
GAAP operating income	$	33,077		$	27,574		$	21,724		$	91,183		$	66,231
Amortization of intangible assets		1,064			1,189			1,344			3,610			3,970
Stock-based compensation expense		3,454			3,508			2,947			10,334			9,211
Restructuring and other charges		—			2,094			(8	)		2,094			(76	)
Acquisition related compensation		—			20			20			40			666
Impact to cost of sales from acquisition accounting adjustments to inventory		—			609			—			609			—
Litigation reserves, net		44			(225	)		—			(234	)		211
Non-GAAP operating income	$	37,639		$	34,769		$	26,027		$	107,636		$	80,213
Non-GAAP operating margin		12.5	%		11.9	%		11.0	%		12.3	%		12.5	%
GAAP net income	$	26,747		$	20,597		$	13,095		$	68,533		$	37,287
Amortization of intangible assets		1,064			1,189			1,344			3,610			3,970
Stock-based compensation expense		3,454			3,508			2,947			10,334			9,211
Restructuring and other charges		—			2,094			(8	)		2,094			(76	)
Acquisition related compensation		—			20			20			40			666
Impact to cost of sales from acquisition accounting adjustments to inventory		—			609			—			609			—
Litigation reserves, net		44			(225	)		—			(234	)		211
Tax effect		(1,383	)		(3,131	)		(1,312	)		(6,238	)		(4,396	)
Non-GAAP net income	$	29,926		$	24,661		$	16,086		$	78,748		$	46,873
NET INCOME PER DILUTED SHARE:
	Three months ended									Nine months ended
	October 2, 2011			July 3, 2011			October 3, 2010			October 2, 2011			October 3, 2010
GAAP net income per diluted share	$	0.70		$	0.54		$	0.36		$	1.81		$	1.04
Amortization of intangible assets		0.03			0.03			0.04			0.10			0.11
Stock-based compensation expense		0.09			0.09			0.08			0.27			0.26
Restructuring and other charges		—			0.06			(0.00	)		0.06			(0.00	)
Acquisition related compensation		—			0.00			0.00			0.00			0.02
Impact to cost of sales from acquisition accounting adjustments to inventory		—			0.02			—			0.02			—
Litigation reserves, net		0.00			(0.01	)		—			(0.01	)		0.01
Tax effect		(0.03	)		(0.08	)		(0.03	)		(0.17	)		(0.13	)
Non-GAAP net income per diluted share	$	0.79		$	0.65		$	0.45		$	2.08		$	1.31

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NETGEAR, INC.

SUPPLEMENTAL FINANCIAL INFORMATION

(In thousands, except per share data)

(Unaudited)

	Three months ended
	October 2, 2011		July 3, 2011		April 3, 2011		December 31, 2010		October 3, 2010
Cash, cash equivalents and short-term investments	$	321,059	$	277,896	$	279,173	$	270,737	$	243,509
Cash, cash equivalents and short-term investments per diluted share	$	8.43	$	7.32	$	7.48	$	7.35	$	6.76
Accounts receivable, net	$	218,653	$	209,960	$	197,622	$	226,731	$	175,599
Days sales outstanding (DSO)		66		66		66		78		73
Inventories	$	135,963	$	137,789	$	140,113	$	127,394	$	110,394
Ending inventory turns		6.0		5.8		5.5		5.6		5.8
Weeks of channel inventory:
U.S. retail channel		10.0		10.6		9.3		9.0		10.0
U.S. distribution channel		6.6		6.6		5.4		4.7		6.7
EMEA distribution channel		4.3		5.5		4.2		3.6		4.5
APAC distribution channel		3.9		5.1		4.0		5.5		5.9
Deferred revenue	$	23,934	$	22,843	$	18,381	$	27,538	$	20,957
Headcount		756		731		686		654		646
Non-GAAP Diluted shares		38,080		37,968		37,340		36,843		36,009

Net Revenue By Geography and Segment:

	October 2, 2011				July 3, 2011				October 3, 2010
Americas	$	149,009	49	%	$	149,526	51	%	$	121,408	51	%
Europe, Middle-East and Africa		119,735	40	%		110,331	38	%		89,565	38	%
Asia Pacific		33,056	11	%		31,383	11	%		25,044	11	%
Total	$	301,800	100	%	$	291,240	100	%	$	236,017	100	%
	October 2, 2011				July 3, 2011				October 3, 2010
Retail	$	127,082	42	%	$	107,869	37	%	$	115,165	49	%
Commercial		91,059	30	%		77,112	26	%		75,532	32	%
Service Provider		83,659	28	%		106,259	37	%		45,320	19	%
Total	$	301,800	100	%	$	291,240	100	%	$	236,017	100	%

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