Netgear Jumps in Trading Debut

Synergy expects the market to post compound annual growth of 14% over the next few years, hitting $3 billion by the end of 2006.

On top of that, the resurgence in equity offerings bodes well for Netgear's debut. "In general, the atmosphere for IPOs has been positive of late, and Netgear should be a beneficiary of this environment," says Richard Peterson, an analyst who focuses on corporate finance for Thomson Financial. July alone saw six IPOs -- more than the five deals that came to market in the first and second quarter, respectively.

And shares of another Wi-Fi play, software company iPass(IPAS Quote), shot up more than 33% in its IPO last week. With sales of only $115 million over the past 12 months, iPass already claims a market cap of $1.07 billion.

"So far, of only four tech IPOs this year, each has been markedly higher on the first day of trading. I suspect Netgear will follow suit," says Peterson. "Plus, of the 16 deals priced this year, only one has fallen below its offer price."

"Netgear does fit the criteria of the recent crop of IPOs that are working -- it's a real company; it has real sales, real earnings," says Peter Bard, an analyst at Renaissance Capital, a research firm focusing on new issues. "It's been around for a while."

Hot IPO, Lukewarm Reception

But that doesn't necessarily make Netgear a standout investment, Bard adds. "They're one of the leaders in equipment but not the largest company in the space," he points out.

That distinction is reserved for Linksys, which owned nearly 28% of the market in consumer wireless LAN as of the first quarter, according to Synergy. Linksys, which gained even more muscle from its recent acquisition by Cisco(CSCO Quote), claims almost double the share of fourth-ranked Netgear, which has only 15%.