NETGEAR to Acquire SkipJam

Acquisition Expands NETGEAR's Software Engineering Expertise for Home Entertainment and Control Multimedia Products

27 Jul 2006

SANTA CLARA, Calif. - July 27, 2006 - NETGEAR, Inc. (Nasdaq: NTGR) a worldwide provider of technologically advanced, branded networking products, today announced the execution of a definitive agreement to acquire SkipJam Corp., a leader in integrated software for home entertainment and control. NETGEAR's acquisition grows its strategically important digital home entertainment and control business by significantly strengthening NETGEAR's software ability to expand its multimedia product portfolio.

Under the terms of the agreement, NETGEAR will pay up to $9 million in cash for SkipJam, a portion of which is structured as a retention incentive program for the acquired engineering team. The acquisition is subject to various standard closing conditions and is expected to close in the third quarter.

“This acquisition supports our vision that the Internet is becoming the primary conduit for the delivery of entertainment and voice as well as data. As more and more entertainment content is digitally distributed over the Internet, the market for networked entertainment devices is growing,” said Patrick Lo, Chairman and CEO of NETGEAR. “With the availability of high-speed, extended range home network infrastructure solutions such as NETGEAR's RangeMax™ Next draft 802.11n wireless and 200 Mbps HD Powerline, streaming multiple HD quality videos simultaneously across the network is now a reality. SkipJam has the unique software technology to become the platform for us to build out our multimedia product portfolio and continue expanding worldwide in the growing category of digital home entertainment and control.”

According to Parks Associates, a leading research firm focused on the digital home, as early as 2010 over 30% of network nodes will be multimedia/entertainment focused, up from 4% today. Parks estimates this represents an opportunity of over 200 million multimedia/entertainment/multimedia nodes to be connected.

This acquisition fits NETGEAR's strategy of expanding its product portfolio, and strengthening its global brand presence. It also accelerates NETGEAR's participation in the expanding market for digital home entertainment and control. SkipJam's technology will form the basis of future NETGEAR multimedia products, including media centers, media players, and audio players, builds upon NETGEAR's first generation of digital home entertainment products, and complements NETGEAR's high-speed, extended range home network infrastructure solutions such as RangeMax Next draft 802.11n wireless and 200 Mbps HD Powerline that enable simultaneous streaming of multiple HD quality videos, and devices like NETGEAR's Storage Central that store digital entertainment files.

The addition of SkipJam's seasoned team of engineering professionals grows a dedicated, world-class group focused on hardware, software, and technology for digital entertainment and control.

SkipJam was founded in 2002 and is based in Port Chester, New York. Upon close of the acquisition, SkipJam's engineering team will be integrated into the NETGEAR engineering organization with Michael Spilo, CEO of SkipJam, becoming NETGEAR's VP of Engineering for Multimedia Products. In accordance with NASDAQ Marketplace Rule 4350, NETGEAR will grant inducement stock options to Mr. Spilo. The options are classified as non-qualified stock options with an exercise price equal to fair market value on the date of grant and have a ten-year term. Mr. Spilo's grant is for 300,000 shares and provides for 25 percent vesting of his shares upon completion of one year of service, with the balance vesting in monthly installments thereafter over 36 months.

SkipJam was represented by its financial advisor, Newforth Partners, LLC.

Filed: Jul 2006, Powerline Networking, Press, Co: NETGEAR, Tech: None