Logitech International SA
(
LOGI
) reported disappointing financial results for the first quarter of
fiscal 2013. The company posted a net loss of 32 cents a share
compared to a loss of 17 cents in the prior-year quarter and
compared to the Zacks Consensus Estimate of $0.00. Excluding
one-time items, the net loss was 11 cents a share.
Increase in net loss was primarily attributable to costs
incurred by the company associated with its exit from its old
campus in Freemont California, along with costs related to
acceleration of its product portfolio.
Revenues
Overall net sales in the first quarter of 2013 were $469
million, declining 2% year over year. Excluding the adverse impact
of currency translation, sales were flat year-over-year. The
reduction was due to the decline in the company's OEM and Americas
retail sales division, which was partially offset by an increase in
revenues in the EMEA.
Sales by Channel
During the quarter, Retail sales were flat year over year at
$395 million. The decline was primarily attributable to an 11%
decline in the Americas and a 17% decline in OEM, which was
partially offset by 17% growth in EMEA and 1% in Lifesize division.
Retail sales in Asia were flat year over year.
Sales by Product Division
Sales of pointing devices in the quarter declined 4.5% to $115.7
million, keyboards and desktops sales increased 16.8%
year-over-year to $110.4 million and revenue from audio devices
grew 16.0% to $90.0 million. However, this increase was fully
offset by a 25.6% decline in video and 26.6% decline in gaming.
Digital home during the quarter reported a 5.2% increase.
Income and Expenses
Gross margin for the quarter was 30.8% compared to 26.1 % in the
year-ago quarter. This rise was driven by continuous progress in
the EMEA sales.
The company reported an operating loss of $59.2 million during
the quarter compared to a loss of $45 million in the year-ago
period. The decline was due to higher restructuring costs in
the reported quarter. Operating expenses for the first quarter of
2013 were $203.5 million, up 19.3% y/y.
Balance Sheet & Cash Flow
As of March 31, 2012, cash and cash equivalents were $360
million and the shareholder's equity was $1.0 billion.
Net cash provided by operating activities was negative $7.0
million at the end of the quarter compared to a positive $3.7
million in the prior-year period. Capital expenditures incurred
during the quarter were $19.6 million.
Peers
Logitech designs, produces and markets hardware and
software products for personal computers and other digital
communication platforms. The homogeneous digital communications
market is severely competitive, resulting in cut-throat pricing
policy. The company's peers,
Koninklijke Philips Electronics
(
PHG
) and
Microsoft Corp.
(
MSFT
), deepen the competitive landscape.
Our Recommendation
The company has a commanding position in the emerging markets,
particularly with a strong presence in China. However, the company
needs to have a strong pipeline of new products in order to compete
effectively in the market. We maintain our long-term
Underperform recommendation on Logitech. Currently, it holds a
short-term Zacks #4 Rank (Sell) on the stock (for the next 1-3
months).
LOGITECH INTL (LOGI): Free Stock Analysis
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MICROSOFT CORP (MSFT): Free Stock Analysis
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