NTGR
#Thank you.
Couple of comments I would make on that.
Retail is mainly cameras add a little bit, too, potentially to 20%.
So, cameras are a little bit more seasonal from a Q4 to Q1.
You notice, I believe, last year the CBU business went up.
The year before it went down.
So it's usually a few points down normally on a seasonality basis and then service provider's lumpy, as we've always said.
Approximately $55 million, if you can see it wasn't quite $55 million this quarter and that moves around.
Basically we are guiding with what we see in front of us but the big differential is in revenue coming down all driven by the retail ---+ just the normal seasonality and then added a little bit by the cameras.
Yes cameras, especially, is very seasonal.
Camera sales over the holiday season is super high and then come into Q1 it drops off pretty quickly.
Like it or not, the thing is, when we calculate revenue we have to take into account returns.
Right.
People by a lot of cameras over Christmas, some of them get returned.
They become negative in Q1.
That's why you get a higher camera business you actually have a more pronounced drop off from Q4 to Q1.
Absolutely.
On a year-over-year basis, definitely but not on a sequential basis because a lot more people buying cameras over the Christmas holiday season and then it [quiets] off in Q1.
That drop off is more pronounced than the normal home networking.
Last year as you rightfully pointed out when home networking is dominant versus Arlo ---+ the drop off in Q4 to Q1 is more like 20% and this year is more pronounced than that because Arlo is definitely a bigger portion of the RBU revenue.
So, that's why you see a more severe drop off from Q4 to Q1.
<UNK>wever, the seasonality for cameras after the drop off in Q1, then it will start to grow again from Q2 all the way back into Q4 again.
One thing we are pretty good out is managing expenses at this point.
With that the seasonality we believe that we have plans to manage this and to achieve our goals and we will stick to that and if different things happen we could just as easily make more revenue and have less.
We will make the appropriate adjustments as necessary.
Well, I mean, if you look at CBU from a pure topline perspective it might be a drop in the bucket.
<UNK>wever, if you look at the bottom line perspective it's pretty sizable, all right.
It is certainly not a business to be sniffed at.
But you're right.
Growing that business would help our bottom line significantly and clearly we are working very diligently to grow that segment.
Now, unfortunately over the last two or three years we have been dragged down by the continuous decline of the storage market.
Everybody knows that.
Most people are now using drop box and Google photos and all that.
So, the entire storage market is shrinking.
So, that really doesn't help us.
Even though our switch is growing pretty nicely every year we still have to counteract the decline in storage.
On the wireless [land] side, the same thing.
We have not been really growing much because of the competitive nature of the market with a lot of strong competitors such as Ubiquity and Rutgers and to a lesser extent, Aruba.
<UNK>wever, we do believe that going forward while the switch business is becoming a much bigger portion versus storage and wireless land, we do have the ability to grow the overall SNB business.
Now clearly, from a full-year 2015 to 2016 we grew nicely on the CBU business, but of course, it's an easy comp, right.
But going forward we could continue to grow the CBU business even in a high single-digit or 10%-ish profitability contribution would be pretty significant.
Sure.
What I would say when we look toward Q2, I would say, it could be flat to slightly up.
That will just depend on how fast the new products get out of the gate.
I would expect flat to slightly up.
Okay.
It is a (inaudible) of mathematics.
As you probably know, in our [out of state] presentation our router share is closer to 45% to 50%.
Our hope is to hold or increase shares in that segment as I just commented.
<UNK>wever, when the market shifts from router to Wi-Fi mash, even though we're the leader in Wi-Fi mash, we are nowhere near the 45% to 50% market share.
So, if you think of the [hot] math we have to deal with, if the market shifts from router to mash, even though we're number one in both cases we could end up losing share overall and we don't quickly get our mash market share through the 45% to 50%.
That's the head that we are working against.
We believe that we would be up to the challenge.
That's why by going up to the challenge we believe that we can grow the RBU about 10% combined with CBU.
Now, given the fact that we say that CBU would be in the high single digits that means implied Orbi has to grow 10% anyway for the year.
Thank you all for joining today's call.
2016 was a phenomenal year for our employees as well as our shareholders.
We entered multiple new product categories, delivered unique solutions to our customers, developed a new exciting stock brands and delivered significant returns for our shareholders with many new and exciting products on the horizon.
We will look to continue our momentum into 2017 and I look forward to updating all of you in April.
Thank you.
