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Logitech Cancels Video-Security Selloff, Turnaround Improves

2/02/2014 07:00:00 PM Eastern

NEWARK, CALIF. — Logitech is no longer selling off its video-security division, a spokeswoman confirmed to TWICE.

Logitech said its financial results late last month, displaying some turnaround progress with a sales uptick of 2 percent for its fiscal third quarter.

According to Nancy Morrison, Logitech corporate communications VP, the company did not find the right buyer for the division and is no longer planning to sell it. Logitech will still maintain the service and offer cameras for sale, she said.

The CE accessories manufacturer, which has been undergoing a public three-year turnaround effort since last year, said sales reached $628 million for the quarter, up 2 percent when compared with the prior-year period.

Third-quarter GAAP operating income was $53 million, while non-GAAP operating income was $67 million, up 84 percent year over year.

Retail sales rose 4 percent year over year for the quarter. Tablet accessories sales grew 95 percent, while it audio category rose 79 percent and PC gaming rose 25 percent.

Its remotes category — which Logitech also indicated it wanted to sell at one point, and then later reversed the decision — declined 19 percent.

Its video and PC audio categories also declined, by 9 percent and 12 percent, respectively. These declines were attributable to the decline in the consumer PC market, Logitech president/CEO Bracken Darrell said in an investors’ call.

Darrell commented on the company’s progress by saying: “We still have more work ahead, but our turnaround is on track.”

Tablet keyboard covers rose 67 percent for the quarter compared with the prior-year period, and Darrell noted that Logitech’s new iPad accessories were on shelf within days of the iPad Air becoming available. The company announced during International CES earlier this month that it would have Bluetooth keyboard cases available for the Samsung Galaxy NotePro and Galaxy TabPro tablets.

For its part, J.P.Morgan noted in a research note that Logitech “fired on all cylinders this holiday season, somewhat expected, but still a net positive” and said it “has done a good job of reducing expenses, improving product focus, and restoring some shine to the Logitech brand through quality and innovation at the high-end of the audio, gaming and tablet accessory categories.”

However, it cautioned: “That said, against the backdrop of a stabilizing PC end market ... the firm’s fortunes now largely rise and fall with the Apple product cycle. Strip out the growth associated with the iPad keyboard/cover from the holiday quarter and the results are underwhelming, notwithstanding good expense discipline. As the tablet market matures and fragments, the ability for [Logitech] to post upside from a perfectly executed quarter will diminish, in our view. Furthermore, we think the easy part of the expense containment exercise is now done.”

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