Forward-looking Statements



This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, Section 21E of the
Securities Exchange Act of 1934, as amended and the Private Securities
Litigation Reform Act of 1995. Such statements are based upon current
expectations that involve risks and uncertainties. Any statements contained
herein that are not statements of historical fact may be deemed to be
forward-looking statements. For example, the words "believes," "anticipates,"
"plans," "expects," "intends," "could," "may," "will," and similar expressions
are intended to identify forward-looking statements. The forward-looking
statements represent NETGEAR, Inc.'s expectations or beliefs concerning future
events based on information available at the time such statements were made and
include statements regarding: NETGEAR's future operating performance and
financial condition, including expectations regarding continued profitability
and cash generation; expectations regarding the timing, distribution, sales
momentum and market acceptance of recent and anticipated new product
introductions that position the Company for growth and market share gain; and
expectations regarding NETGEAR's paid subscriber base growth, registered users
and registered app users. These statements are based on management's current
expectations and are subject to certain risks and uncertainties, including the
following: uncertainty surrounding the duration and impact of the global
COVID-19 pandemic; uncertainty surrounding inventory and supply chain
management; inflation; geopolitical instability; changes in government and tax
policies and regulations; future demand for the Company's products may be lower
than anticipated; consumers may choose not to adopt the Company's new product
offerings or adopt competing products; product performance may be adversely
affected by real world operating conditions; the Company may be unsuccessful or
experience delays in manufacturing and distributing its new and existing
products; telecommunications service providers may choose to slow their
deployment of the Company's products or utilize competing products; the Company
may be unable to grow its number of registered users and/or registered app
users; the Company may be unable to grow its paid subscriber base; the Company
may be unable to collect receivables as they become due; the Company may fail to
manage costs, including the cost of material and component and freight, and cost
of developing new products and manufacturing and distribution of its existing
offerings; changes in the level of NETGEAR's cash resources and the Company's
planned usage of such resources, including potential repurchases of the
Company's common stock; changes in the Company's stock price and developments in
the business that could increase the Company's cash needs; fluctuations in
foreign exchange rates; and the actions and financial health of the Company's
customers. Further, certain forward-looking statements are based on assumptions
as to future events that may not prove to be accurate. Therefore, our actual
results and the timing of certain events may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such a discrepancy include, but are not limited to, those discussed in "Part
II-Item 1A-Risk Factors" and "Liquidity and Capital Resources" below. All
forward-looking statements in this document are based on information available
to us as of the date hereof and we assume no obligation to update any such
forward-looking statements except as required by law. The following discussion
should be read in conjunction with our unaudited condensed consolidated
financial statements and the accompanying notes contained in this quarterly
report. Unless expressly stated or the context otherwise requires, the terms
"we," "our," "us" and "NETGEAR" refer to NETGEAR, Inc. and its subsidiaries.

Business and Executive Overview



We are a global company that turns ideas into innovative, high-performance, and
premium networking products that connect people, power businesses and service
providers. Our products are designed to simplify and improve people's lives. Our
strategy focuses on being the leader of the premium WiFi consumer market, and to
serve the market with high-performance, secure, and dependable products and
services. We believe our targeted customers value speed, connectivity, and the
security of their network. Our strategy is to create and grow the higher price
points of the consumer networking market, where we believe competition is less
intense and consumers are less price sensitive, offering the possibility to
upsell our subscription services and higher margin products. Our goal is to
enable people to collaborate and connect to a world of information and
entertainment in or outside of the home. We are dedicated to delivering
innovative and advanced connected solutions ranging from easy-to-use premium
WiFi solutions, performance gaming routers that enhance console and online-game
play, security and support services to protect and enhance home networks, to
switching and wireless solutions to augment business networks and audio and
video over Ethernet for Pro AV applications. We keep people

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connected through product and service offerings, including ultra-premium Orbi
Mesh WiFi systems, high-performance Nighthawk routers, high-speed cable modems,
5G mobile wireless products, cloud-based subscription services for network
management and security, smart networking products and Video over Ethernet for
Pro AV applications. Our products and services are built on a variety of
technologies such as wireless (WiFi and 4G/5G mobile), Ethernet and powerline,
with a focus on reliability and ease-of-use. Additionally, we continually invest
in research and development to create new technologies and services and to
capitalize on technological inflection points and trends, such as WiFi 6, WiFi
6E, 5G, audio and video over Ethernet, non-fungible token ("NFT") artwork, and
future technologies. Our product line consists of devices that create and extend
wired and wireless networks, devices that attach to the network, such as smart
digital canvasses as well as services that complement and enhance our product
line offerings. These products are available in multiple configurations to
address the changing needs of our customers in each geographic region.

We operate and report in two segments: Connected Home, and Small and Medium
Business ("SMB"). We believe that this structure reflects our current
operational and financial management, and that it provides the best structure
for us to focus on growth opportunities while maintaining financial discipline.
The leadership team of each segment is focused on serving customer needs through
product and service development efforts, both from a product marketing and
engineering standpoint. The Connected Home segment focuses on consumers and
provides high-performance, dependable and easy-to-use premium WiFi internet
networking solutions such as WiFi 6 and WiFi 6E Tri-band and Quad-band mesh
systems, routers, 4G/5G mobile products, smart devices such as Meural digital
canvasses, and subscription services that provide consumers a range of
value-added services focused on performance, security, privacy and premium
support. The SMB segment focuses on small and medium sized businesses and
provides solutions for business networking, wireless local area network
("LAN"), audio and video over Ethernet for Pro AV applications, security and
remote management providing enterprise-class functionality at an affordable
price. We conduct business across three geographic regions: Americas; Europe,
Middle East, and Africa ("EMEA"); and Asia Pacific ("APAC").

Business Overview



The markets in which our segments operate are intensely competitive and subject
to rapid technological evolution. We believe that the principal competitive
factors in the consumer and small and medium-sized business markets for
networking products include product breadth, price points, size and scope of the
sales channel, brand recognition, timeliness of new product introductions,
product availability, performance, features, functionality, reliability,
ease-of-installation, maintenance and use, security, as well as customer service
and support. To remain competitive, we believe we must continue to aggressively
invest resources to develop new products and subscription services, enhance our
current products, and expand our channels and direct-to-consumer capabilities,
while increasing engagement and maintaining satisfaction with our customers. Our
investments reflect our steadfast focus on cybersecurity of our products and
systems, as the rising threat of cyber-attacks and exploitation of security
vulnerabilities in our industry is a significant consumer concern.

We sell our products through multiple sales channels worldwide, including
traditional and online retailers, wholesale distributors, direct market
resellers ("DMRs"), value-added resellers ("VARs"), broadband service providers,
and through our direct online store at www.netgear.com. Our retail channel
includes traditional retail locations domestically and internationally, such as
Best Buy, Wal-Mart, Costco, Staples, Office Depot, Target, Fnac Darty (Europe),
MediaMarkt (Europe), JB HiFi (Australia), Elkjop (Norway) and Sunning and Guomei
(China). Online retailers include Amazon.com (worldwide), Newegg.com (U.S.),
JD.com, Alibaba (China) and Coolblue.com (Netherlands). Our DMRs include CDW
Corporation, Insight Corporation and PC Connection in domestic markets. Our main
wholesale distributors include Ingram Micro, TD Synnex, and D&H Distribution
Company. In addition, we also sell our products through broadband service
providers, such as multiple system operators, xDSL, mobile, and other broadband
technology operators domestically and internationally. Some of these retailers
and broadband service providers purchase directly from us, while others are
fulfilled through wholesale distributors around the world. A substantial portion
of our net revenue is derived from a limited number of wholesale distributors,
service providers and retailers. While we expect these channels to continue to
be a significant part of our sales strategy, increasingly, customers are
choosing to purchase products and services directly from us. We expect revenue
through our direct online store or in-app offerings to continue to increase as a
percentage of overall revenue for the foreseeable future.

Financial Overview



During the three months ended July 3, 2022, our net revenue decreased by $85.6
million compared to the prior year period. The decrease was primarily driven by
the retail portion of our Connected Home segment, which saw net revenue decline
by $99.6 million, mainly driven by a combination of elevated prior year sales to
replenish depleted channel inventories and demand receding to just below
pre-pandemic levels of 2019. Despite the decline, with improved supply

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availability, we saw positive growth trends in 5G mobile hotspots and
super-premium WiFi mesh products of our Connected Home segment, as well in our
Pro AV product line of managed switches in our SMB segment. Loss from operations
was $10.1 million during the three months ended July 3, 2022, as compared to
income from operations of $21.5 million in the prior year period. The decline in
net revenue resulted in a $31.9 million reduction in gross profit.

Geographically, net revenue decreased across all three regions during the three
months ended July 3, 2022, compared to the prior year period. Net revenue from
Connected Home across all three regions declined, partially offset by increases
in net revenue from SMB across all three regions, compared to the prior year
period.

COVID-19 Pandemic Update

The COVID-19 pandemic continues to have widespread, rapidly evolving, and
unpredictable impacts on global economies, inflation, supply chains, work force
participation, and has created significant volatility and disruption in
financial markets. Our focus remains on promoting employee health and safety,
serving our customers and ensuring business continuity. Since the onset of the
pandemic, we have taken actions by directing most of our worldwide workforce to
work from home, allowing only critical business travel, and replacing in-person
events with digital events. In addition, as COVID-19 restrictions have eased in
some jurisdictions, some of our offices, including our San Jose headquarters,
have transitioned to hybrid work allowing employees to work in the office on an
as-needed basis. We continue to actively monitor the situation and will continue
to adapt our business operations as necessary.

The COVID-19 pandemic has brought about a considerable shift in our business
while increasing uncertainty. As a result of the ongoing pandemic, our supply
chain partners are limited by production capacity, constrained by material
availability, factory uptime and freight capacity, resulting in elongated lead
times for some of our key components, impeding our ability to accurately
forecast and to capitalize fully on end market demand. In the first fiscal
quarter of 2022, COVID-19 induced lockdowns in China impacted supply of
components to our supply chain partners, constraining our ability to deliver
meaningfully higher net revenue for our SMB products. We expect supply chain
constraints to improve but continue to exist for the foreseeable future,
impacting our ability to fulfill SMB product demand and limiting availability of
certain Connected Home products. Supply chain constraints have brought about a
meaningful increase in the cost of sea transportation, while we have increased
our reliance on airfreight transportation to secure supply to offset lengthening
sea transit times. However, in the second quarter of 2022, we began to see a
positive downward trend on the cost per container to move goods via sea.
Additionally, shortages for materials and components have resulted in increased
acquisition costs for our products.

We anticipate net revenue for Connected Home products sold through the retail
channel to rise in the second half of 2022 relative to the first half of 2022,
along with net revenue for the SMB segment and from the service provider
channel. Our super-premium mesh systems and 5G mobile hotspots in the Connected
Home segment, Pro AV products in the SMB segment, and our suite of subscription
services in both Connected Home and SMB segments are expected to drive our
revenue growth. We aim to execute on our strategy of capitalizing on the
technological inflection points of WiFi 6E, WiFi 6, 5G and audio and video over
Ethernet, to develop and expand the premium WiFi market through new product
introductions and to develop and roll out service offerings that build recurring
service revenue streams. While we have been able to manage through most of the
COVID-19 related supply chain challenges to date, any further disruption brought
about by the COVID-19 pandemic to supply chain partners, production schedules,
material availability or freight carriers or any increases to costs associated
with supply chain operations could have a significant negative impact on our net
revenue, gross and operating margin performance.

The extent of the impact of the COVID-19 pandemic on our ongoing operational and
financial performance, including our ability to execute our business strategies
and initiatives in the expected time frame, will depend on future developments.
The duration of the pandemic and the broader implications of the macro-economic
recovery, any related disruptions to channel partners and restrictions on travel
and transport are uncertain and unpredictable. Refer to Item 1A, Risk Factors of
Part II of this Quarterly Report on Form 10-Q for various risks and
uncertainties associated with the COVID-19 pandemic.

Critical Accounting Estimates



In preparing our condensed consolidated financial statements, we make
assumptions, judgments and estimates that can have a significant impact on our
revenue, operating income, and net income, as well as on the value of certain
assets and liabilities on our condensed consolidated balance sheets. We base
these estimates on historical and anticipated results, trends and various other
assumptions that we believe are reasonable under the circumstances. As of the
date of issuance of

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these condensed consolidated financial statements, we are not aware of any
specific event or circumstance that would require us to update our estimates,
judgments or revise the carrying value of our assets or liabilities. These
estimates may change, as new events occur and additional information is
obtained, and are recognized in the condensed consolidated financial statements
as soon as they become known. Actual results could differ materially from those
estimates under different assumptions and conditions.

For a complete description of what we believe to be the critical accounting
estimates used in the preparation of our Unaudited Condensed Consolidated
Financial Statements, refer to our Annual Report. Refer to Note 1. The Company
and Basis of Presentation, in the Notes to Unaudited Condensed Consolidated
Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q,
for the risks and uncertainties related to the COVID-19 pandemic.

Results of Operations

The following table sets forth the unaudited condensed consolidated statements of operations for the periods presented.



                                      Three Months Ended                                       Six Months Ended
(In thousands,
except percentage
data)                      July 3, 2022               June 27, 2021                July 3, 2022               June 27, 2021
Net revenue           $ 223,224        100.0 %    $ 308,811        100.0 %    $ 433,782        100.0 %    $ 626,736        100.0 %
Cost of revenue         161,803         72.5 %      215,455         69.8 %      313,458         72.3 %      422,439         67.4 %
Gross profit             61,421         27.5 %       93,356         30.2 %      120,324         27.7 %      204,297         32.6 %
Operating expenses:
Research and
development              22,205          9.9 %       22,586          7.3 %  

46,026 10.6 % 46,415 7.4 % Sales and marketing 34,546 15.5 % 35,740 11.5 %

70,132 16.2 % 73,555 11.7 % General and administrative

           14,147          6.3 %       15,623          5.1 %       27,749          6.4 %       31,028          5.0 %
Goodwill impairment
charge                        -            - %            -            - %       44,442         10.2 %            -            - %
Other operating
expenses (income),
net                         573          0.3 %       (2,097 )       (0.7 )%         570          0.1 %          468          0.1 %
Total operating
expenses                 71,471         32.0 %       71,852         23.2 %      188,919         43.5 %      151,466         24.2 %
Income (loss) from
operations              (10,050 )       (4.5 )%      21,504          7.0 %      (68,595 )      (15.8 )%      52,831          8.4 %
Other income
(expenses), net            (820 )       (0.4 )%         699          0.2 % 

(1,802 ) (0.4 )% 147 0.1 % Income (loss) before income taxes (10,870 ) (4.9 )% 22,203 7.2 %


    (70,397 )      (16.2 )%      52,978          8.5 %
Provision for
(benefit from)
income taxes             (2,336 )       (1.1 )%       4,369          1.4 %       (4,653 )       (1.0 )%      12,184          2.0 %
Net income (loss)     $  (8,534 )       (3.8 )%   $  17,834          5.8 %    $ (65,744 )      (15.2 )%   $  40,794          6.5 %


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Net Revenue by Geographic Region



Our net revenue consists of gross product shipments and service revenue, less
allowances for estimated sales returns, price protection, end-user customer
rebates and other channel sales incentives deemed to be a reduction of revenue
per the authoritative guidance for revenue recognition, and net changes in
deferred revenue.

For reporting purposes, revenue is generally attributed to each geographic region based upon the location of the customer.


                                    Three Months Ended                                      Six Months Ended
(In thousands,
except percentage
data)                July 3, 2022       % Change        June 27, 2021       July 3, 2022       % Change        June 27, 2021
Americas            $      144,027          (32.3 )%   $       212,634     $      288,676          (33.1 )%   $       431,784
Percentage of net
revenue                       64.5 %                              68.9 %             66.5 %                              68.9 %
EMEA                $       44,951          (27.2 )%   $        61,772     $       81,816          (33.4 )%   $       122,862
Percentage of net
revenue                       20.1 %                              20.0 %             18.9 %                              19.6 %
APAC                $       34,246           (0.5 )%   $        34,405     $       63,290          (12.2 )%   $        72,090
Percentage of net
revenue                       15.3 %                              11.1 %             14.6 %                              11.5 %
Total net revenue   $      223,224          (27.7 )%   $       308,811     $      433,782          (30.8 )%   $       626,736


Americas

Net revenue in Americas decreased in the three and six months ended July 3,
2022, primarily due to the performance of our Connected Home segment, which
experienced declines in net revenue of 43.8% and 43.1%, respectively, compared
to the prior year periods. The pandemic-induced demand resulting from continued
work and schooling from home mandates remained elevated in the first half of
2021, while market demand in the first half of 2022 receded to just below
pre-pandemic levels of 2019. The declines in Connected Home performance were
partially offset by strong demand for our SMB products, in spite of supply chain
challenges, with net revenue in the three and six months ended July 3, 2022,
increasing by 26.4% and 20.4%, respectively, compared to the prior year
periods.

EMEA

Net revenue in EMEA decreased in the three and six months ended July 3, 2022, compared to the prior year periods, as pandemic driven demand across the Connected Home segment receded, noting declines of 61.1% and 66.0%, respectively, which were partially offset by increases of 10.5% and 1.7%, respectively, in SMB net revenue.

APAC



Net revenue in APAC remained relatively consistent for the three months ended
July 3, 2022, while decreasing for the six months ended July 3, 2022, compared
to the prior year periods. Decreases in net revenue for the three and six months
ended July 3, 2022 from Connected Home were experienced across all product
categories, partially offset by increases in net revenue from SMB, mainly
attributable to strong performance of managed switch and wireless products.

For further discussions specific to our Connected Home and SMB business, refer to the "Segment Information" section below.

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; third-party software licensing fees; inbound freight; import duties/tariffs; warranty costs associated with returned goods; write-


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downs for excess and obsolete inventory; amortization of certain acquired intangibles and software development costs; and costs attributable to the provision of service offerings.



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
average selling prices, end-user customer rebates and other channel sales
incentives, changes in our cost of goods sold due to fluctuations and increases
in prices paid for components, net of vendor rebates, royalty and licensing
fees, warranty and overhead costs, inbound freight and duty/tariffs, conversion
costs, charges for excess or obsolete inventory, amortization of acquired
intangibles and capitalized software development costs. The following table
presents costs of revenue and gross margin, for the periods indicated:

                                                         Three Months Ended                                      Six Months Ended

(In thousands, except percentage data) July 3, 2022 % Change

June 27, 2021 July 3, 2022 % Change June 27, 2021 Cost of revenue

$      161,803          (24.9 )%   

$ 215,455 $ 313,458 (25.8 )% $ 422,439 Gross margin percentage

                            27.5 %                              30.2 %             27.7 %                              32.6 %


Our overall gross margin decreased for the three and six months ended July 3,
2022, compared to the prior year periods, primarily due to increased product
acquisition costs, partially offset by improved product mix, with SMB net
revenue representing a higher proportion of net revenue as compared to the prior
year periods.

We expect gross margin percentage for the second half of 2022 to improve
compared to the first half of 2022. Over the past year and a half, we
experienced meaningful increases in the cost of materials and components for our
products. After twelve months of continuous increase in sea freight
transportation costs, in the second quarter of 2022, we began to see a positive
downward trend. In the first quarter of 2022, we selectively increased the price
of our products, and then again in the second quarter for certain SMB products,
to offset increased costs. For the remainder of the year, we expect that our
reliance on air transportation for SMB products will continue. In addition, we
anticipate the cost of sea freight transportation to trend down. We believe that
a combination of improved product mix with increased Connected Home and SMB
products, higher subscription services and selective price increases will help
to deliver improvement to margin performance as the year progresses.

We continue to experience disruptions caused by the pandemic, with partners
affected by factory uptime, scarcity of materials and components and limited
capacity to transport cargo via sea and air. In the first half of 2022,
pandemic-induced lockdowns in China disrupted supply of components to our
manufacturers, limiting our ability to capitalize further on strong demand for
our SMB products. If such disruptions become more widespread, they could
significantly hamper our ability to fulfill the demand for our
products. Forecasting gross margin percentages is difficult, and there are a
number of risks related to our ability to maintain or improve our current gross
margin levels. Our cost of revenue as a percentage of net revenue can vary
significantly based upon factors such as: uncertainties surrounding revenue
levels, including future pricing and/or potential discounts as a result of the
economy or in response to the strengthening of the U.S. dollar in our
international markets, competition, the timing of sales, and related production
level variances; import customs duties and imposed tariffs; changes in
technology; changes in product mix; expenses associated with writing off
excessive or obsolete inventory; variability of stock-based compensation costs;
royalties to third parties; fluctuations in freight costs; manufacturing and
purchase price variances; changes in prices on commodity components; and
warranty costs. We expect that revenue derived from paid subscription service
plans will continue to increase in the future, which may have a positive impact
on our gross margin. However, we may experience fluctuations in our gross margin
due to the factors discussed above.

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Operating Expenses

Research and Development

Research and development expenses consist primarily of personnel expenses,
payments to suppliers for design services, safety and regulatory testing,
product certification expenditures to qualify our products for sale into
specific markets, prototypes, IT and facility allocations, and other consulting
fees. Research and development expenses are recognized as they are incurred. Our
research and development organization is focused on enhancing our ability to
introduce innovative and easy-to-use products and services. The following table
presents research and development expenses, for the periods indicated:

                                                         Three Months Ended                                       Six Months Ended

(In thousands, except percentage data) July 3, 2022 % Change

June 27, 2021 July 3, 2022 % Change June 27, 2021 Research and development

$       22,205            (1.7 )%   $        22,586     $       46,026            (0.8 )%   $        46,415


Research and development expenses remained relatively flat for the three and six
months ended July 3, 2022, compared to the prior year periods as decreases in
personnel-related expenditures of $1.6 million and $2.3 million, respectively,
mainly resulting from lower performance-based compensation expense, were mostly
offset by increased costs for engineering projects and outside professional
services in support of our product development efforts.

We believe that innovation and technological leadership is critical to our
future success, and we are committed to continuing a significant level of
research and development to develop new technologies, products and services. We
continue to invest in research and development to grow our cloud platform
capabilities, our services and mobile applications and to expand our hardware
product offerings focused on premium WiFi 6E, WiFi 6, Advanced 4G/5G mobile and
5G coverage solutions, audio and video over Ethernet, web-managed, 10Gig and PoE
switch and SMB wireless products. We expect research and development expenses as
a percentage of net revenue in the second half of 2022 to decline from the first
half of 2022 levels. Research and development expenses may fluctuate depending
on the timing and number of development activities and could vary significantly
as a percentage of net revenue, depending on actual revenues achieved in any
given quarter.

Sales and Marketing

Sales and marketing expenses consist primarily of advertising, trade shows,
corporate communications and other marketing expenses, product marketing
expenses, outbound freight costs, amortization of certain intangibles, personnel
expenses for sales and marketing staff, technical support expenses, and IT and
facility allocations. The following table presents sales and marketing expenses,
for the periods indicated:

                                                          Three Months Ended                                        Six Months Ended

(In thousands, except percentage data) July 3, 2022 % Change

    June 27, 2021       July 3, 2022        % Change         June 27, 2021
Sales and marketing                      $       34,546             (3.3 )%   $        35,740     $       70,132             (4.7 )%   $        73,555



Sales and marketing expenses decreased for the three and six months ended July
3, 2022, compared to the prior year periods, primarily attributable to decreases
in personnel-related expenditures of $1.5 million and $2.8 million,
respectively, mainly due to lower performance-based compensation expenses, and
in outside service expenditures of $0.6 million and $1.3 million, respectively,
mainly due to lower call center support costs. The decreases were partially
offset by increased freight costs of $0.5 million and $1.2 million,
respectively. Sales and marketing expenses in the six months ended July 3, 2022
were also favorably impacted by lower amortization of intangibles of $1.3
million.

We expect our sales and marketing expenses as a percentage of net revenue in the
second half of 2022 to decline from the first half of 2022 levels. Expenses may
fluctuate depending on revenue levels achieved as certain expenses, such as
commissions, are determined based upon the revenues achieved. Forecasting sales
and marketing expenses is highly dependent on expected revenue levels and could
vary significantly depending on actual revenue achieved in any given quarter.
Marketing expenses may also fluctuate depending upon the timing, extent and
nature of marketing programs.

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Marketing expenditure committed with a customer is generally recorded as a reduction of revenue per authoritative guidance.

General and Administrative



General and administrative expenses consist of salaries and related expenses for
executives, finance and accounting, human resources, information technology,
professional fees, including legal costs associated with defending claims
against us, allowance for doubtful accounts, IT and facility allocations, and
other general corporate expenses. The following table presents general and
administrative expenses, for the periods indicated:

                                                         Three Months Ended                                       Six Months Ended

(In thousands, except percentage data) July 3, 2022 % Change

June 27, 2021 July 3, 2022 % Change June 27, 2021 General and administrative

$       14,147            (9.4 )%   $        15,623     $       27,749           (10.6 )%   $        31,028



The decreases in general and administrative expenses for the three and six
months ended July 3, 2022, compared to the prior year periods, were primarily
driven by lower personnel-related expenditure of $2.5 million and $4.7 million,
respectively, partially offset by increases in legal and professional services
fees of $0.8 million and $1.2 million, respectively, mainly associated with
patent litigation claims. The declines in the personnel-related expenditures
were mainly due to lower performance-based compensation expenses and lower
stock-based compensation.

We expect our general and administrative expenses as a percentage of net revenue
in the second half of 2022 to decline from the first half of 2022 levels.
General and administrative expenses could fluctuate depending on a number of
factors, including the level and timing of expenditures associated with
litigation defense costs in connection with the litigation matters described in
Note 8, Commitments and Contingencies, in Notes to Unaudited Condensed
Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report
on Form 10-Q. Future general and administrative expense increases or decreases
in absolute dollars are difficult to predict due to the lack of visibility of
certain costs, including legal costs associated with defending claims against
us, as well as legal costs associated with asserting and enforcing our
intellectual property portfolio and other factors.

Goodwill impairment charge

The following table presents goodwill impairment charge for the periods indicated:


                                                       Three Months Ended                                   Six Months Ended

(In thousands, except percentage data) July 3, 2022 % Change June 27, 2021 July 3, 2022 % Change June 27, 2021 Goodwill impairment charge

               $            -             **   $             -     $       44,442            **   $             -



**Percentage change not meaningful.

The increase in goodwill impairment charge for the six months ended July 3, 2022, compared to the prior year period, was due to an impairment charge recognized for the Connected Home segment resulting from an interim goodwill impairment assessment performed, in the first fiscal quarter of 2022. For a detailed discussion of goodwill impairment charge, refer to Note 4, Balance Sheet Components, in Notes to Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.


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Other operating expenses (income), net

Other operating expenses (income), net consists of restructuring and other charges, litigation reserves, net, and change in fair value of contingent consideration. The following table presents Other operating expenses (income), net for the periods indicated:



                                                      Three Months Ended                                  Six Months Ended

(In thousands, except percentage data) July 3, 2022 % Change June 27, 2021 July 3, 2022 % Change June 27, 2021 Other operating expenses (income), net $ 573

           **   $        (2,097 )   $         570           21.8 %   $           468



**Percentage change not meaningful.



The changes in other operating expenses (income), net for the three and six
months ended July 3, 2022, compared to the prior year periods, were primarily
due to a $3.0 million release of a contingent consideration liability associated
with a prior acquisition in the three months ended June 27, 2021, whereas there
were no such benefits in the corresponding periods of 2022. Further, we incurred
restructuring and other charges of $0.6 million associated with the
reorganization of our Connected Home segment in the three months ended July 3,
2022 to better align the cost structure of the business with projected revenue
levels, as compared to restructuring and other charges of $0.9 million and $3.2
million in three and six months ended June 27, 2021, respectively, associated
with the consolidation of offices in the APAC region and the reorganization of
our supply chain function.

Other Income (Expenses), Net

Other income (expenses), net consists of interest income, which represents
amounts earned and incurred on our cash, cash equivalents and short-term
investments, and other income and expenses, which primarily represents gains and
losses on transactions denominated in foreign currencies, gains and losses on
investments, and other non-operating income and expenses. The following table
presents other income (expenses), net for the periods indicated:

                                                      Three Months Ended                                 Six Months Ended

(In thousands, except percentage data) July 3, 2022 % Change June 27, 2021 July 3, 2022 % Change June 27, 2021 Other income (expenses), net

             $         (820 )         **   $           699     $       (1,802 )         **   $           147



**Percentage change not meaningful.



The changes in other income (expenses), net for the three and six months ended
July 3, 2022, compared to the prior year periods were primarily due to increased
net losses on our short-term investments.

Provision for (Benefit from) Income Taxes



                                                            Three Months Ended                                      Six Months Ended

(In thousands, except percentage data) July 3, 2022 % Change

June 27, 2021 July 3, 2022 % Change June 27, 2021 Provision for (benefit from) income taxes $ (2,336 ) (153.5 )% $ 4,369 $ (4,653 ) (138.2 )% $ 12,184 Effective tax rate

                                    21.5 %                              19.7 %              6.6 %                              23.0 %


The changes in taxes for the three and six months ended July 3, 2022, compared
to the prior year periods, were primarily due to tax benefit recorded on losses
during the current periods. These benefits were partially offset by the tax
impact of the goodwill impairment that is non-deductible for tax purposes. For
the three and six months ended June 27, 2021, higher pre-tax earnings resulted
in an increase in tax expenses, which were partially offset by tax benefits
related to stock-based compensation and non-taxable income related to
adjustments to acquisition-related contingent accruals.

We are subject to income taxes in the U.S. and numerous foreign jurisdictions.
Our future foreign tax rate could be affected by changes in the composition in
earnings in countries with tax rates differing from the U.S. federal rate. We
are

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currently under examination by the U.S. Internal Revenue Service ("IRS") for our
fiscal years ended December 31, 2018 and December 31, 2019. We are also under
examination in various other state, local and foreign jurisdictions.

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