Logitech sees Q1 operating loss, shares tumble
Logitech, the world’s largest computer mouse maker, disappointed markets by posting a wider-than-expected fourth-quarter loss as the global economic downturn dampened consumers’ appetite for its products.
By 1053 GMT (6:53 a.m. EDT), shares in the group had plunged 11 percent to 12.19 Swiss francs, underperforming a near flat Swiss index .SLI.
The group painted a gloomy outlook for the first quarter, but Chief Executive Gerald Quindlen told Reuters this could be the turning point in the year for Logitech.
“Although we expect Q1 to be the low point in operating results there are signs that demand is stabilizing,” Gerald Quindlen told Reuters in an interview.
The fourth-quarter net loss of $35 million fell well short of analysts’ forecasts and compared with a year-earlier profit of $60.3 million.
“The historic (sales) growth levels of 15 percent are certainly not a thing of the past,” Quindlen said, adding that it was “just a question of time” before Logitech returned to a profit margin of 32 to 34 percent.
Consumers are reining in spending as their savings portfolios tumble in value and many worry about their jobs. Retailers are also reluctant to build up stock in the face of sluggish demand as the economic crisis bites.
“Logitech’s results are very disappointing,” Sal. Oppenheim analyst Nicolas von Stackelberg said, adding the worst was probably yet to come instant payday loan.
Logitech sees first-quarter sales of $300 million to $320 million and an operating loss of $40 million to $50 million. The first quarter is traditionally the group’s weakest period.
Fourth-quarter sales fell 32 percent to $408 million as a stronger dollar weighed, but Logitech said its market share was largely stable, and in some product categories it had even managed to grow.
“It seems that Logitech had to, and will, clean out old inventory with high discounts,” said Helvea analyst Tomas Hilfing. “As we had assumed, retailers seem to be keeping low inventory levels currently.”
Logitech said it will reduce shipments of its products and push promotional activities to help lower stock levels at shops.
Quindlen said further job cuts were unlikely after the group said in January it was cutting 15 percent of its salaried workforce — or around 500 jobs.
Analysts had expected Logitech to post a net loss of $3 million, according to the average estimate in a Reuters poll of 11 analysts.
(Additional reporting by Andrew Thompson in Zurich and Jennifer Robin Raj in Bangalore; Writing by Katie Reid; Editing by Jon Loades-Carter)