Netgear 2010 Annual Report Download - page 46

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Table of Contents
Net revenue by geographic location is as follows:
2009 Net Revenue Compared to 2008 Net Revenue
Net revenue decreased $56.7 million, or 7.6%, to $686.6 million for the year ended December 31, 2009, from $743.3 million for the year
ended December 31, 2008. The decrease in net revenue was principally attributable to lower shipments of our broadband gateway products to
traditional resellers and existing service provider customers. Additionally, we experienced weakening demand for our switch products and
wireless-G products. Our revenue decline continued to be negatively impacted by the economic downturn and relatively stronger U.S. dollar.
These decreases were partially mitigated by increased sales of wireless-N products sold to retailers and existing service provider customers as
well as our increased focus on reducing sales incentives that impact net revenue.
Net revenue by geographic location is as follows:
Cost of Revenue and Gross Margin
Cost of revenue consists primarily of the following: the cost of finished products from our third-party manufacturers; overhead costs
including purchasing, product planning, inventory control, warehousing and distribution logistics; inbound freight; warranty costs associated
with returned goods; write-downs for excess and obsolete inventory; and amortization expense of certain acquired intangibles. We outsource our
manufacturing, warehousing and distribution logistics. We believe this outsourcing strategy allows us to better manage our product costs and
gross margin. Our gross margin can be affected by a number of factors, including fluctuation in foreign exchange rates, sales returns, changes in
net revenues due to changes in average selling prices, end-user
44
Year Ended December 31,
2010
Percentage
Change
2009
(In thousands, except percentage data)
North America
465,063
47.9
%
314,392
Percentage of net revenue
51.6
%
45.8
%
Europe, Middle
-
East, and Africa
340,473
16.5
%
292,182
Percentage of net revenue
37.7
%
42.6
%
Asia Pacific
96,516
20.6
%
80,021
Percentage of net revenue
10.7
%
11.6
%
Year Ended December 31,
2009
Percentage
Change
2008
(In thousands, except percentage data)
North America
314,392
5.6
%
297,641
Percentage of net revenue
45.8
%
40.0
%
Europe, Middle
-
East, and Africa
292,182
(17.5
%)
354,058
Percentage of net revenue
42.6
%
47.6
%
Asia Pacific
80,021
(12.7
%)
91,645
Percentage of net revenue
11.6
%
12.4
%
Year Ended December 31,
2010
Percentage
Change
2009
Percentage
Change
2008
(In thousands, except percentage data)
Cost of revenue
$
602,805
25.5
%
$
480,195
(4.4
%)
502,320
Gross margin percentage
33.2
%
30.1
%
32.4
%