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Logitech Trims Business, Divests Majority Stake in Lifesize


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Premium provider of personal computer and tablet accessories, Logitech International SA LOGI , announced that its Lifesize division has split from the parent company to form a new private firm called Lifesize, Inc.

In particular, Logitech has sold 62.5% stake in Lifesize to three venture capital firms, namely, Redpoint Ventures, Sutter Hill Ventures and Meritech Capital Partners, for a total worth of $17.5 million. The remaining 37.5% share will be owned by Logitech.

The company plans to deconsolidate Lifestyle's financials from its own from the fourth quarter of fiscal 2016 onward. Logitech also expects to book non-cash gains of approximately $15-$20 million in fiscal fourth-quarter 2016.

Lifesize, a U.S.-based video and audio telecommunications company, offers high definition videoconferencing endpoints & accessories and cloud-based video collaboration platforms. Logitech had acquired Lifesize in 2009.

Logitech's decision to divest Lifesize demonstrates the former's focus on its ongoing three-year turnaround plan to reduce operational costs as well as improve profits and margins. This divesture will also help Lifesize strengthen its foothold in the expanding videoconferencing software-as-a-service (SaaS) market, as it capitalizes on the rich market experience of its new investors.

Moreover, this divesture will be conducive to Logitech's attempt to create a simpler organizational structure. Management believes that the separation of Lifesize from its business will allow it to channelize resources toward its thriving retail trade. At the same time, the company's remaining stake in Lifesize will help it gather benefits going forward, with Lifesize's cloud-based video communication offering gaining steady popularity among small- and medium-sized businesses.

Logitech currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Mercury Systems, Inc. MRCY , TransAct Technologies Incorporated TACT and Alps Electric Co. Ltd. APELY . While Mercury Systems and TransAct Technologies sport a Zacks Rank #1 (Strong Buy), Alps Electric holds a Zacks Rank #2 (Buy).

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LOGITECH INTL (LOGI): Free Stock Analysis Report

ALPS ELECTRIC (APELY): Free Stock Analysis Report

TRANSACT TECH (TACT): Free Stock Analysis Report

MERCURY SYSTEMS (MRCY): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Business , Investing , Stocks
Referenced Symbols: LOGI , APELY , TACT , MRCY



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