What happened

Shares of networking equipment maker Netgear (NASDAQ:NTGR) got a brutal haircut in 2019. The stock fell 52.9% last year, according to data from S&P Global Market Intelligence. You could make the case that Netgear's stock really only took a 23.1% hit if you don't think that the spinoff of home automation business Arlo Technologies (NYSE:ARLO) should be included in stock returns for Netgear shareholders. Even so, a 23% drop over a period in which the S&P 500 market barometer posted a 29% gain still counts as a bad year.

A businessman standing on a high wire, far above the skyscrapers of a big city, apparently off balance but still up there.

Image source: Getty Images.

So what

Netgear delivered earnings above Wall Street's expectations throughout the year, but revenues came up short in February's fourth-quarter report and again in October's third-quarter update. Management pointed to unexpected economic slowdowns in China and Hong Kong alongside Brexit uncertainty and other macroeconomic events beyond management's control.

The company dropped its 84.2% ownership of Arlo Technologies to zero just before entering a long-awaited period of product upgrades, rolling out Wifi 6 routers and related gear before any of its major competitors.

Now what

Netgear expects most of the benefits of the Wifi 6 product cycle to show up in 2020 and beyond. That makes 2019 a year of forward-looking investments, as Netgear had to develop and start to market the new product generation in order to take part in the coming upgrade cycle. All of this was done while enduring external pressures such as Chinese trade tariffs and wobbly Brexit progress.

The company could bounce back from these pressures, triggering a solid jump in share prices as well. But Netgear's troubles are not quite behind it yet, and it probably makes more sense to stay mostly on the sidelines until Netgear starts to realize the promised advantages of the next-generation Wifi 6 cycle.