Logitech In Red In Q1, CEO Steps Down

John Laposky -- TWICE, 7/28/2011

Fremont, Calif. - Logitech International reported a larger than expected first-quarter net loss, of $29.6 million, and Gerald Quinlan announced he is stepping down as president/CEO.

The Swiss company's net loss compared with a quarterly net profit of $19.5 million a year earlier.

Logitech reported quarterly sales of $480 million, flat from $479 million in Q1 a year ago. Excluding favorable exchange rates, sales declined by 4 percent year over year.

The company posted an operating loss of $45 million, compared with operating income of $12 million in the same quarter a year ago. Logitech cited $34 million in charges to the cost of goods sold, due to the price reduction on its flagship Logitech Revue with Google TV from $249 to $99 during last year's Q2. Net loss for Q1 was $30 million, compared with net income of $20 million in Q1 last year.

Gross margin, at 26.1 percent, reflected the charge related to the repricing of Logitech Revue. It was down from 35.3 percent a year ago.

The company also lowered its sales outlook for the full fiscal year to approximately $2.5 billion from $2.6 billion, and lowered its operating income target form $185 million to at or near last year's level of $143 million.

Quindlen has been replaced on an acting basis by Logitech's chairman, Guerrino De Luca.

"My priorities will be to pursue our many opportunities with a strong sense of urgency and to renew the confidence in Logitech among all stakeholders," said De Luca in a statement.

The company said the results reflect sustained weakness in its EMEA sales region and "minimal sales growth" in its Americas region, primarily due to very weak sales in the digital home category. Sales of the company's bread-and-butter mouse and keyboard lines in particular have been negatively affected by the rise of the tablet PC.