SiliconBeat

Netgear, the San Jose supplier of networking gear targeted for use by consumers and small businesses, pulled back its guidance for sales in its recently completed third quarter by about 15 percent, but says its operating margin — adjusted for some special items — will actually be higher. Huh?

“We experienced weakness in September demand on our consumer products across all channels and in all geographies, particularly in the service provider channel, where our carrier customers worldwide requested shipment delays on previously placed orders, thereby preventing us from recognizing revenue on those orders,” said Netgear’s Chief Executive Patrick Low in a press release issued this morning. “We believe the uncertainty in the economies and financial markets worldwide, especially in light of recent events, is causing the weakening of demand and we expect these conditions to persist until financial confidence returns to the market.”

Revenue for the quarter ended Sept. 28 is expected to be in the range of $173 million to $183 million, below the previous range of $208 million to $212 million provided on July 23.
Somehow, the company said it expects its non-GAAP operating margin — adjusted to exclude special items — will range from 10.3 percent to 11.3 percent compared with previous expectations for a margin of between 9.5 percent and 10.5 percent.

The company also said it expects to report an expense of between $4.5 and $5.5 million related to losses on transactions denominated in foreign currencies because of the dollars gathering strength last quarter against Australian dollar, the British pound and the Euro. Ugh.

Netgear shares (NTGR) were slammed after the news, falling $1.14, or 9.2 percent in regular trading Wednesday. The company will release final results on Oct. 23.