Netgear on Tuesday announced its board has approved the separation of its Arlo security camera unit into a separate business.
The separation will occur through an IPO of newly issued shares of common stock of Arlo Technologies that will hold the Arlo business. Netgear said it expects Arlo will issue less than 20 percent of its common stock in the IPO, with Netgear to retain the remaining interest.
Netgear said Arlo will confidentially submit a registration statement to the SEC in the first half of 2018, with the IPO expected to occur in the second half of 2018. Upon completion of the IPO, Netgear said Matthew McRae will serve as CEO of Arlo. McRae joined Netgear as SVP of strategy four months prior.
Arlo has a lineup of home and business security cameras that offer HD video quality, two-way audio, live streaming, free cloud recording, instant alerts, and other features. Arlo just launched its latest camera, the Arlo Pro 2, with a wire free design and rechargeable battery to take on Amazon, Google's Nest, and others in the smart home space.
On Tuesday, Netgear also reported its fourth quarter financial results that beat market expectations.
The networking company reported a net loss of $31.9 million, or $1.02 a share, on revenue of $397.1 million, an increase of 7.9 percent. Non-GAAP earnings were 71 cents a share. Netgear said its GAAP net loss includes one-time charge of $48.3 million relating to US tax reform.
Wall Street was looking for earnings of 64 cents a share on revenue of $393.42 million.
For full year 2017, Netgear reported net revenue of $1.41 billion, as compared to $1.33 billion in 2016, an increase of 5.9%. 2017 GAAP net income was 59 cents per share, compared to $2.25 in 2016.
For the first quarter 2018, Netgear expects revenue to be in the range of $330 million to $345 million.