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Logitech Announces Restructuring, Workforce Reductions


Logitech International
attempted to right its year of financial
woes, announcing that the company
has eliminated two executive management
positions as part of its transformation
strategy, which includes workforce

The company also reported that its
sales for the fiscal fourth quarter were
down 3 percent.

Junien Labrousse will no longer hold
the positions of executive VP of the
products group and president of Logitech
Europe. He will instead become
senior VP of the business group responsible
for PCs, Macs and tablets, and his
former positions will be eliminated.

Those who previously reported to
Labrousse will now report to Logitech
president Bracken Darrell. Darrell became
Logitech’s president just a few
weeks ago, and is in line to eventually
succeed chairman and CEO Guerrino
De Luca.

According a form 8-K filed with the
Securities & Exchange Commission
(SEC), Labrousse’s annual base salary
will be reduced from approximately
$775,000 to approximately $680,000,
and his bonus target as a percentage
of base salary will be reduced from 75
percent to 65 percent.

Werner Heid, previously senior VP of
worldwide sales and marketing, will be
leaving the company May 15. His position
has been eliminated. Those who reported
to Heid will now report to Darrel as well.

Darrell said in a conference call: “I
believe that Logitech’s size got ahead of
its business over the last several years.
It’s clear to me that to reignite growth,
we need to be faster, simpler and more
consumer centric … These changes enable
me to work more closely with our
product and sales teams Together, we
can become more responsive to the
changing needs of today’s consumers
as we address new opportunities with
greater speed and flexibility.”

Logitech’s Form 8-K also details
changes in its executive management,
stating that it has “approved a restructuring
expected to result in a reduction
of approximately $80 million in annual
operating expenses.”

The restructuring, Logitech said, “includes
the elimination of a layer of executive
management, a realignment of reporting
assignments for the sales regions,
product groups and marketing groups,
and a workforce reduction.”

There are no further details on the
workforce reduction. Nancy Morrison,
Logitech corporate communications VP,
told TWICE: “We do expect the actions
to be taken in this fiscal quarter.”

Logitech’s fourth-quarter sales for the
fiscal year were $532 million, which is
down 3 percent from $548 million in the
prior-year period. When the unfavorable
impact of exchange rates is considered,
sales decreased by 2 percent.

Operating income was $24 million,
compared with $4 million in prior-year period,
and net income was $28 million compared
with $3 million. Gross margin for
the quarter was 36.4 percent, compared with 32.8 percent in prior-year period.

Retail sales also decreased a total of
2 percent year over year. Sales were up
13 percent in EMEA and 12 percent in
Asia, but down 17 percent in the Americas.
OEM sales decreased 9 percent,
and sales for the LifeSize division decreased
10 percent.

The declines in sales in the Americas
were mainly attributable to “pronounced
weakness in the digital home
and webcam categories. Sales of our
discontinued offerings for GoogleTV
were down by roughly $5 million compared
to the prior year. Sales of remotes,
which were negatively impacted
by gaps in our product refresh cycle,
declined by over 50 percent while consumer
webcam sales fell by 40 percent,”
Logitech said.

For the full fiscal year, sales were relatively
flat at $2.32 billion, compared with
$2.36 billion in the prior-year period.

Operating income for the fiscal year
was $72 million, down 50 percent from
2011’s $143 million. Net income was
$71 million, down 44 percent from $128
million, and gross margin was 33.5 percent,
compared with 35.4 percent in the
2011 fiscal year.