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Logitech Cuts Forecasts on Euro, Slowing Sales: Zurich Mover

Logitech Chairman and interim CEO Guerrino De Luca
Logitech International SA Chairman and interim CEO Guerrino De Luca. David Paul Morris/Bloomberg

Logitech International SA, the world’s biggest maker of computer mice, dropped the most in nine months in Zurich trading after cutting full-year forecasts for the third time, citing the weaker euro and declining sales.

Logitech shares fell 12 percent to 6.58 Swiss francs. The company reduced its sales forecast for the fiscal year ending March 31 to about $2.3 billion, with operating income predicted at about $60 million. Logitech, which also produces gaming hardware, in September cut its forecast for full-year operating profit to about $90 million on sales of about $2.4 billion.

“The biggest disappointment is the guidance revision,” Michael Foeth, an analyst at Vontobel Holding AG, said in a note today. “With that we fear confidence in management is eroding further.”

The revision came as Logitech reported net income for the quarter ended Dec. 31 that fell 15 percent to $55 million, missing analysts’ estimates. The Morges, Switzerland-based company is under pressure from the proliferation of tablet computers that aren’t controlled by mice, which is eroding its traditional desktop and notebook business. The euro has dropped 5.2 percent against the dollar in the past three months.

“The euro has weakened considerably” during the past quarter, Chairman and interim Chief Executive Officer Guerrino De Luca said in the statement. “In addition, webcams and remotes continue to be impacted more than expected by product portfolio and market weakness.”

Logitech shares have fallen 64 percent in the past 12 months, compared with a 7.5 percent decline in the Swiss Market Index.

New Products

“Our number one priority is to have great new products that are now in the pipeline and we’ve been late in developing for so long,” De Luca said in a phone interview. The new devices will be in sectors such as digital music and Logitech’s core offerings for PCs and in high-end products, De Luca said.. “The contribution from the new products will be visible in the second part of our 2013 fiscal year.”

Third-quarter sales fell 5 percent to $715 million, the company said today in a statement. The profit and sales figures missed analyst estimates of $61.2 million and $749 million, respectively, based on the average of 10 and 13 estimates compiled by Bloomberg.

Western Europe

“Weak economic conditions continue to weigh heavily on consumer sentiment in several mature markets in western Europe, negatively impacting our sales in Italy, Spain and several other countries,” Logitech said.

The company had “an operational improvement” in its Europe, Middle East and Africa sales region in the third quarter, De Luca said. “We cannot control economic conditions but we’ve fixed what’s under our control in EMEA.” He added that “the region is in balance with the channel inventories even if it’s not yet visible in our numbers, but it will be.”

The lowered forecast “is a disappointment, but the problems are more structural,” Andreas Mueller, an analyst at Zuercher Kantonalbank, said in an interview. “The market environment was bad, combined with some product glitches. But it takes time to revamp a product portfolio.”

Logitech’s product range includes home-entertainment control, gaming and wireless devices.

Revenue at LifeSize Communications Inc., the videoconferencing unit that Logitech bought in 2009, rose 6 percent in the period.

Cash flow from operations in the third quarter was $153 million, and the company ended with $523 million in cash, De Luca said. The company can buy back as much as $177 million in shares, he said.

De Luca is looking for a successor to replace former CEO Gerald Quindlen, who left in July. De Luca said on a conference call that the search for a permanent CEO is “progressing very well,” without giving a time frame for the appointment.

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