Logitech International SA
) reported a loss of $1.24 per share in the first quarter of
2013, considerably below the Zacks Consensus Estimate of 34 cents
earnings of 32 cents in prior-year quarter. Continued weakness in
the global PC market is the primary factor behind the loss in the
Net sales in the third quarter of 2013 stood at $615 million,
down 14% year over year. The decline in revenues was primarily
due to greater-than-expected weakening of the PC market. The
general slowdown in the emerging markets also had a negative
impact on the company's top line.
Sales by Channel
During the quarter,
sales declined 14% year over year to $542.4 million. The
reduction was due to lower sales from the EMEA region (down 20%),
Americas (8%), Asia (11%), Lifesize (3.6%) and OEM (22.5%).
Sales by Product Division
Tablet Accessories was the best-performing retail product
category in the reported quarter with sales increasing a robust
119.2% year over year to $39.4 million. However, this increase
was fully offset by a 10.5% decline in pointing devices to $153.9
million, 5.8% decrease in Keyboards & Desktops revenue to
$110.6 million and 18.7% drop in audio PC revenue to $47.4
million. Moreover, gaming revenues and other revenues were down
by 19.7% and 77.8%, respectively.
Income and Expenses
Gross margin for the quarter was 33.7% compared with 32.7% in
the year-ago quarter. This increase in gross margin was driven by
tight management of channel-pricing programs and a variety of
efficiency improvements in the global supply chain.
Operating loss for the quarter was $215 million, compared with
an operating profit of $48.2 million in the same quarter last
year. Operating expenses for the third quarter of 2013 were $765
million, up 43.2% year over year.
Balance Sheet & Cash Flow
As of Dec 31, 2012, cash and cash equivalents were $321.9
million and shareholder's equity was $756.5 billion.
Net cash provided by operating activities was $95.1 million at
the end of the quarter versus $152.3 million in the prior-year
period. Capital expenditures incurred during the quarter were
Given the current trend toward smart phones and tablets,
Logitech intends to tap this high potential market, which is
still under penetrated in terms of accessories. The company has
also taken certain strategic decisions to improve its
profitability going forward. Logitech intends to sustain its
leadership in the PC platform-related products where it has
engineering, distribution and scale advantages.
Further, management has identified a number of product
categories that no longer fit with the company's strategic
direction. As a result, Logitech has initiated the process to
divest its remote controls and digital video security categories
and also plans to discontinue other non-strategic products, such
as speaker docks and console gaming peripherals, by the end of
Logitech believes that by doing so, the company will not
become a more focused company but will also reduce costs
significantly. The company expects to generate savings of
approximately $80 million annually through 2014.
Logitech has a Zacks Rank #4 (Strong Sell) while its
) has a Zacks Rank #1 (Stong Buy) and
LG Display Co.
) carry Zacks Rank # 2 (Buy).
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