Logitech, the world known maker of computer and gaming peripherals has announced that their CEO, Gerald Quindlen, would be stepping down from his position and abdicating it to the former CEO Guerrino De Luca. This is amid Wednesday’s poor earnings showing, which was released at the same time as the CEO announcement. Logitech reported Revenues of $480M in 1Q FY 2012 , up from $479M in the previous quarter, but down 4% from the same period a year ago. Furthermore, Logitech posted a $45M operating loss, $34M of which came from a charge to cost of goods sold to a planned price reduction on Logitech Revue (Google TV).
Logitech Revue TV – Google TV product (echo of Apple TV) which failed to take off
This indicates that Google TV really isn’t selling as well as either company had expected. From our experience, Google TV has a lot of potential, but it lacks developer support and not enough streaming content availability because not everyone wants to watch their home cable.
Logitech’s retail sales were flat year over year overall as the company saw a 1% increase in the Americas and a 29% increase in Asia, but saw a 14% decrease in Europe which has been a generally strong market for the company. Their EMEA weakness indicates that perhaps it may be a result of marketing and sales strategies combined with stagnant demand in the EMEA market as a whole due to the austerity measures being implemented across the EU. They also saw OEM sales decrease by 16% while their LifeSize division grew 34%, which still wasn’t able to offset their OEM losses.
Logitech also lowered their sales outlook for the coming year by $100M to $2.5B down from their previously forecasted $2.6B. They also lowered their operating income targets for FY 2012 from $185M to equal or greater than FY 2011′s operating income of $143M. Overall, these are some very disappointing numbers considering that in most cases Logitech has a 100% markup MSRP on their products.
Currently, LOGI is trading at $9.61, down $0.70 or 6.89% after trading yesterday. And to be quite honest, we’re not sure we expect the stock to move up any time soon considering their downgrades. Yesterday’s trading actually put Logitech at their 52 week low of $9.44. This represents more than a 50% decrease from January this year where the stock was at $20. So there’s a good chance that the bottom is indeed in sight and that Logitech can rebound from these setbacks and improve their positions in Europe and America with competitive products and hopefully less write offs from Google TV.