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Logitech Revenue Down, Says Turnaround On Track

Newark, Calif. — Logitech International reported another down quarter, but it expressed confidence in the progress of its three-year turnaround plan. 10/24/2013 08:04:00 AM Eastern

Newark, Calif. — Logitech International reported another down quarter, but it expressed confidence in the progress of its three-year turnaround plan.

Revenue for the second quarter of fiscal 2014 was $532 million, down 3 percent compared with the prior-year period.

Second-quarter GAAP operating income was $17 million, while non-GAAP operating income was $37 million. Year-to-date GAAP operating income was $17 million, while non-GAAP year-to-date operating income was $49 million.

Bracken Darrell, Logitech president and CEO, said in an investors’ call that the company is on track for its turnaround. Noting that sales have declined just 1 percent year to date, Darrell said, “We’re ahead of our own expectations, but it’s still early in our first turnaround year.”

Tablet accessories showed 3 percent sales growth, while wearable and wireless audio rose 34 percent for year-over-year sales. Darrell said the latter category’s “star performer” had been the UE Boom, a portable Bluetooth speaker. The company released a scaled-down version of the speaker earlier this month, known as the Mini Boom. 

The pointing device and keyboard and desktop categories also showed growth — 7 percent and 8 percent year over year, respectively — but Darrell noted Logitech isn’t “planning on sustained momentum in coming quarters given our expectations for a declining PC market.”  

Sales for its gaming category dropped 11 percent, primarily because of poor sales execution in Germany, Logitech said. U.S. and Asia Pacific gaming sales both increased by approximately 15 percent.

Video sales fell 17 percent, which “reflects our systematic shift away from the low end of the consumer webcam category,” the company said. Its digital video security category, which Logitech is in the process of exiting, saw sales plummet 25 percent.

Remote-control sales declined 19 percent, and the company said it continues “to exit the unprofitable low-end of the category, in line with our strategy.” It noted that the average selling price for the category increased by 67 percent, propelled by the introduction of the Harmony Ultimate in April.

Newly hired chief financial officer Vincent Pilette said the company has taken the right steps to lower its cost structure across all functions. “We’re making good progress, but more work lies ahead as we’re still in the early stages of our three-year turnaround plan.”

Logitech also introduced a mobile speakerphone this month with Bluetooth and nearfield communications (NFC) connectivity, the P710e. When asked about accessories for the iPad Air, Darrell said, “We’re not announcing anything today, but stay turned … Safe to say we’ll be in market very soon, certainly ought to be before Christmas.”

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