Netgear 2012 Annual Report Download - page 51

Table of Contents
Retail
2012 vs 2011
The retail business unit experienced a slight increase in revenue from 2011 to 2012. The increase was primarily driven by an increase in
revenue from sales of our home wireless products, partially offset by a decrease in sales of our powerline, home storage and broadband gateways
products. The retail business unit experienced strong revenue growth in the Americas region and moderate growth in the APAC region; however
these increases were partially offset by a decrease in net revenues from sales in the EMEA region, as the region continued to experience
macroeconomic weakness in the European market. The increase in contribution income was primarily due to revenue growth, which was partially
offset by an increase in operating expenses, primarily driven by investments in research and development, as well as product management and
marketing costs.
2011 vs 2010
We experienced strong net revenue growth in the retail business unit from 2010 to 2011. The increase was mainly driven by a 34.5% increase in
the revenue from our home wireless-N product line due to consumers transitioning from wireless-G to wireless-
N technology. We also experienced
strong growth in contribution income. The increase in contribution income was primarily due to revenue growth and an increase in gross margin,
which was mainly driven by a decrease in freight costs due to a favorable shift from air to sea freight. Net revenue increased by 10.6% and retail-
related gross profit increased by 15.0% over the same period. The impact of the increase in gross profit was partially offset by an increase in retail-
related operating expenses, which increased by 16.7% over the same period.
Commercial
2012 vs 2011
We experienced a decrease in net revenues in the commercial business unit from 2011 to 2012. The decrease in net revenues was primarily
experienced in the EMEA region, as the region continued to experience macroeconomic weakness in the European market. Net revenues from sales
in the Americas and APAC regions remained relatively flat. On a product-
level, the decrease was primarily attributable to a decrease in sales from
our network storage product line. Contribution income also decreased, primarily due to the decline in revenue out-
pacing the savings from decreases
in our costs of revenue and operating expenses. Net revenue decreased by 7.1%
, while costs of revenue and operating expenses decreased by 6.5%
and 6.3% respectively. The decrease in costs of revenue was primarily attributable to the decrease in net revenues and a more favorable air/sea freight
mix. The decrease in our commercial business unit's operating expenses was primarily due to a decrease in sales and marketing cost, partially offset
by an increase in research and development costs.
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Year Ended December 31,
2012 % Change 2011 % Change 2010
( in thousands, except percentage data)
Net revenue
$
504,797
4.8
%
$
481,795
10.6
%
$
435,484
Percentage of net revenue
39.7
%
40.8
%
48.3
%
Contribution income
86,808
6.4
%
81,589
13.5
%
71,862
Contribution margin
17.2
%
16.9
%
16.5
%
Year Ended December 31,
2012 % Change 2011 % Change 2010
( in thousands, except percentage data)
Net revenue
$
307,945
(7.1
)%
$
331,439
16.5
%
$
284,539
Percentage of net revenue
24.2
%
28.1
%
31.5
%
Contribution income
67,826
(9.3
)%
74,746
18.6
%
63,021
Contribution margin
22.0
%
22.6
%
22.1
%