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What: Shares of networking equipment maker Netgear (Nasdaq: NTGR) plunged today, down by 12% at their low before recovering, after fourth-quarter earnings were reported.

So what: Revenue added up to $309.2 million, leading to earnings of $0.69 per share. The figures topped the market's expectations, and forward-looking guidance also came out on top. The company expects first quarter sales between $310 million and $325 million, which looks healthy compared to the $311 million consensus.

Now what: What's weighing on shareholders is the prospect of costs getting jacked up and putting a crimp on the bottom line. Deutsche Bank downgraded shares to Hold while lowering its price target to $40. The analyst said that despite the strong quarter, the company warned it was increasing R&D spending and there are concerns over if Netgear can successfully build up its software offerings.

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