Netgear Shares Plunged: What You Need to Know

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 networking equipment maker Netgear (NAS: 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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At the time thisarticle was published Fool contributorEvan Niuholds no position in any company mentioned.Click hereto see his holdings and a short bio.Motley Fool newsletter serviceshave recommended buying shares of Netgear. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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