Want to hitch a ride on one of the fastest growing small caps out there? Netgear is a very very very rare small internet company that is making profits. Lately, Netgear is taking positive steps to take advantage of voice-over-internet-protocol technology. Their latest [intuitive] product is their VOIP wireless phone. Netgear’s CEO, Patrick Lo, is hoping to grab a huge chunk of Skype’s users… that’s a huge chunk of a huge chunk! How huge? Skype flew past social net site MySpace with 113 million users worldwide. Lo hopes to attract about 12 million users. What a smart move- let big boy eBay dish out the $1 billion to promote Skype, then hitch a ride on the hype for a much smaller cost (I just realized ‘hype’ rhymes with ‘skype’; did I spell rhymes right?). I also like Netgear’s lifetime chart, which is trending up, but has clearly formed a resistance at about $25.
Anyway, although it’s a speculative pick, it’s not as risky as they usually get. To me, Netgear is becoming a high tech household item.
Things to watch if you invest in Netgear’s WiFi phone:
- Cisco’s (CSCO) performance – the king of networking technology has the power to drag down the sector, destroy small caps, or the opposite.
- Skype news headlines- because VOIP is a new technology, there will be all kinds of praises as well as skeptical disdains with internet phone use.
- Competition- none so far now
- Technicals- volume is at record highs. Beware of $17.50 support; go strong over $24.