We’ll keep an eye on these new spinoffs

Article Excerpt

NETGEAR INC. $64 (Nasdaq symbol NTGR; Manufacturing & Industry sector; Shares outstanding: 31.4 million; Market cap: $2.0 billion; No dividends paid; Takeover Target Rating: Medium; www.netgear.com) is a networking equipment provider for small businesses and home users. Its products include wi-fi routers, and both DSL and USB modems. Netgear recently announced that it would separate Arlo Technologies, its residential and business do-it-yourself security camera business, from the rest of the company. To do so, it will use a carveout strategy: first, it will launch an IPO to sell a stake in the business (in this case, 20% of Arlo) and hang onto the remainder (80%). Later, in 2019, Netgear will hand out its remaining Arlo shares to existing investors. They’ll only pay capital gains taxes on those shares when they sell them. In 2017, Netgear’s revenue rose 5.9%, to $1.41 billion from $1.33 billion in 2016. Arlo’s revenue was $378.4 million in 2017, or 27% of the total; that’s up 100.8% from $188.5 million in…

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