New York — Logitech held its annual investor day here today, reporting significant progress in its turnaround efforts in the 14 months since president Bracken Darrell added CEO to his title.
“Consumers are showing their approval of our renewed emphasis on product design,” said Darrell, as he reported raised earnings and sales guidance numbers for fiscal 2014, ended March 31; forecasted improved growth for fiscal 2015; and announced a $250 million company stock buyback to award shareholders for their confidence.
Logitech executives explained their turnaround strategy remains focused on deemphasizing the company’s presence in declining markets such as traditional PC accessories and staying “laser-focused” on three main growth opportunities for the company’s accessories business: keyboards and cases for tablets, high-end prosumer gaming peripherals, and the company’s entry into the exploding wireless speaker market.
Chief financial officer Vincent Pilette said the company intends to continue to introduce fewer products, spending more resources on innovation and product design in the three main growth categories, with an eye on sustained growth in profit margin, already underway.
He also touted Logitech’s recent efforts to increase efficiency and react quickly to market shifts, relating the fact that Logitech was the only keyboard case with suspend/resume magnets on retail shelves on the day the iPad Air became available, earning it worldwide placement in Apple Stores.
Focusing on the overall tablet market, tablet accessories general manager Mike Culver outlined the company’s expectation of 20 percent growth in tablet shipments across all OS types in fiscal 2015 and predicted an accelerating rate of consumer acceptance for larger-screen models, such as Samsung’s 12-inch Galaxy Note Pro, the upcoming 12.2-inch Galaxy Tab Pro, and Windows 8 tablets from Dell and Lenovo, among others.
Culver said Logitech expects attachment rates for keyboards for the new larger Android and Windows models to be much higher than that of the iPad as size and functionality begin to more closely rival that of a laptop, further opening the enterprise and productivity channels.
Logitech had great success in the tablet case and keyboard market upon its entry in May 2013, grabbing 51 percent of the Apple tablet keyboard unit market share in the calendar year, based on data from The NPD Group. During his presentation, Culver cited consumer surveys that show that typing on a physical keyboard remains the most preferred and efficient input method for more than short messages.
Next up was gaming general manager Ehtisham Rabbani, who described an evolving market of multi-platform gamers. “Traditionally you were either a PC gamer or a console gamer and whichever you were, you hated the other,” he said, “but that is no longer true.” He presented NPD statistics showing year-over-year monthly PC gaming peripheral sales growing between 21 percent and 32 percent while console gaming accessories jumped 43 percent with the launch of the Xbox One and PlayStation 4 during the 2013 holiday shopping season.
Logitech remains highly visible in both the PC and console gaming accessories markets, and the company is exploring opportunities in the mobile gaming space, which has created a whole new class of consumers introduced to gaming by their smartphone and tablet use.
The company sees big potential in iOS game controllers especially, but warned that the market is at a very early stage of consumer adoption. However, Rabbanni said, Logitech is well positioned to adapt to this potentially large new market.
Audio wearables and wireless general manager Rory Dooley addressed the continued strength of the portable audio market and the success of the company’s first wireless speaker, the Ultimate Ears Boom, which debuted in 500 stores in the spring of 2013, and is now in more than 10,000 stores worldwide, including nontraditional outlets such as Verizon carrier stores and outdoor lifestyle chain REI.
“The line between tech and non-tech is blurring [and] new lifestyle retail outlets are emerging as promising new channels,” he told analysts.
Logitech pegged the portable wireless speaker market at $1.8 billion for the previous 12 months and predicted the market would nearly double to $3.3 billion in fiscal 2015, which would surpass the docking speaker market’s peak of $2.2 billion in 2012. Dooley added Logitech recognized early on that the growing adoption of streaming music services would increase consumption of digital music on mobile devices and said that even a modest level of attachment sales of speakers with phones and tablets could triple the global portable speaker market by 2017.
Logitech said it has also taken steps to maximize profits in its legacy categories, including keyboards and pointing devices, PC and wearable audio, webcams and remotes, which combined made up about $6 billion of the total worldwide accessories market in 2013. The company sees those combined categories declining closer to $5 billion by 2016.
Logitech’s stock price has risen 134 percent in the last 12 months.
