Logitech International SA
) reported third-quarter 2014 earnings of 35 cents per share,
133% above the Zacks Consensus Estimate of 15 cents and 84% above
the previous-year quarter earnings.
The year-over-year increase in earnings was due to solid
performance in its growth categories, namely, tablet accessories,
PC gaming and wireless speakers. Moreover, Logitech experienced
growth in tablet accessories across all its operating regions in
the Americas and Asia except EMEA (Europe, the Middle East and
Net sales in the third quarter were up 2.2% year over year to
$627 million, compared with $614 million in third-quarter 2013.
Revenues also exceeded the Zacks Consensus Estimate of $575
million by 9.0%. Improved sales performance in the company's
growth categories were partially offset by continued weak market
conditions, especially in Europe and decline in the global PC
Sales by Channel
The company's retail sales increased 3.9% year over year to
$563.4 million. The retail category reported a 62% increase
overall. Sales in the OEM division declined 2.1%, while sales in
the Video conferencing division declined 18.6%.
Retail Category Sales by Product Division
Tablet & other accessories posted a robust 95.5% increase
again, while Audio- Wearables & Wireless category was the
second-best performing retail product category, with sales rising
78.8% year over year to $42.1 million. There was also a 24.6%
rise in sales from PC gaming to $156.2 million.
Gross margin for the quarter improved to 34.1% compared with
34.0% in the third quarter of 2013. This increase in gross margin
was due to product cost improvements across all PC-related
categories, streamlining of product portfolio and cost savings
due to restructuring.
Operating income for the reported quarter was $53.2 million,
compared with an operating loss of $180.4 million in the third
quarter of the previous year. Operating expenses were down by
almost 59% year over year to $160.1 million due to cost savings
attributable to restructuring charges.
Balance Sheet and Cash Flow
As of Dec 31, 2013, cash and cash equivalents were $379.8
million, down 17.9% from the year-ago level.
Net cash provided by operating activities was $93.7 million at
the end of the quarter versus $95.1 million in the prior-year
Driven by the strong performance of the company in the third
quarter, Logitech has raised its full-year guidance for fiscal
2014. The company now expects sales a little below $2.1 billion,
compared to the earlier guidance of $2.0 billion. This apart,
non-GAAP operating income is expected to be in the range of $120
million to $125 million, compared to the previously announced
Logitech is doing well in the tablet and gaming accessories
market along with its portfolio of wireless speakers. The company
reported earnings improvement, as expected, as it is reaping
benefits from its restructuring and turnaround plans. Going
forward, the company intends to focus on its core product line by
divesting its non-strategic assets. However, the competitive
markets and the consistently slumping desktop PC business are
likely to be a headwind for the company.
Logitech currently holds a Zacks Rank #1 (Strong Buy). Other
players in the computer peripheral sector, that look attractive
at current levels, include
LG Display Co., Ltd
). While LG Display Co., Ltd. and Synaptics Inc. carry a Zacks
Rank #1, Analogic Corporation carries a Zacks Rank #2 (Buy).
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