NETGEAR, Inc. has now announced plans to offshoot its Arlo Technologies, Inc. security camera's division into a separate business, which will also be taken public via an initial public offering (IPO) expected to take place in the second half of the year. As much as 20-percent of the business will be made available if everything goes according to plan and the first draft of its IPO registration is expected to be filed with the SEC at some point during the first half of the year. That also means that the company was not able to give any estimates for how much in funding it hopes to gain through the IPO or what that funding might ultimately be spent on. No other financial details about the public offering have been disclosed, as of this writing.
However, the company has said, via its associated press release, that those shares will be held by NETGEAR's stockholders in a way that will keep them tax-free for U.S. federal income tax purposes. Moreover, NETGEAR's current Senior Vice President of Strategy, Matthew McRae, will move to fill the role of CEO of Arlo once the split is complete. McRae is a fairly recent addition to NETGEAR's team, joining just four months ago after previously serving as Vizio's CTO and Head of Marketing. Finally, although the decision to differentiate Arlo from NETGEAR was unanimously made by the company's board of directors, the company has stated that finalization of the IPO and distribution will remain at the discretion of that same board of directors – as well as the usual legal considerations.
Subsequent reports have, meanwhile, made some speculations as to why NETGEAR would want to split Arlo off from the main company bloc. While NETGEAR itself saw less-than-desirable results over the course of 2017 – posting $31 million in losses, compared to a $30 million revenue gain – Arlo did much better. In fact, growth in revenue for the smart security technologies firm shot up by 67-percent year-over-year. If that turns out to be the company's reason behind this newly planned IPO, splitting the businesses up will almost certainly prevent Arlo from being negatively affected by any ramifications of further drops in NETGEAR's performance. That should give the company the freedom to more aggressively innovate in its relatively competitive IoT market sphere.