Why Netgear, Inc. Stock Tumbled Today

Is Netgear's drop meaningful? Or just another movement?

Jul 25, 2014 at 4:05PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Netgear (NASDAQ:NTGR) dropped more than 11% in Friday's trading after the networking equipment specialist reported mixed second-quarter results and disappointing forward-margin guidance.

So what: Quarterly revenue fell 5.6% year over year, to $337.6 million -- or the low end of Netgear's own guidance -- which translated to a 6.5% drop in adjusted net income per diluted share, to $0.58. Analysts, on average, were only expecting adjusted earnings of $0.55 per share, but on higher sales of $344.3 million.

However, Netgear expects current-quarter revenue in the range of $345 million to $360 million, which is well below analysts' expectations for third-quarter sales of roughly $366 million.

Now what: Netgear CEO Patrick Lo explained that the second-quarter shortfall came primarily as the result of continued weakness in Europe. At the same time, Lo insisted, "We are taking proactive measures to address this by realigning the Northern European [Retail Business Unit] and Commercial Business Unit] sales channels." Over the long term, this should aid Netgear in achieving its goals of taking market share, and improving profitability in the region.

I've made no secret of my fondness for this solidly profitable small-cap stock. After all, as Internet-connected devices only continue to become more ubiquitous, Netgear's solid long-term growth prospects only become all that much more clear. And continued weakness in Europe, while not ideal, is hardly indicative of a broader problem with Netgear's business. As a result, I still plan on holding tight to my own shares of Netgear for the foreseeable future.

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Steve Symington owns shares of Netgear. The Motley Fool recommends Netgear. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

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Everything else is details. 

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