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Logitech's income drops 70 percent
Author: Gareth HalfacreePublished: 21st January 2009
Peripherals manufacturer Logitech had a poor last quarter, with income down 70 percent - and is looking to lose 600 employees to get back on track.
According to figures quoted by BetaNews yesterday, the company is facing a massive slump in income for the last financial quarter – not helped by some acquisition initiated before the scale of the global economic slowdown was apparent.
Back in August last year Logitech announced that it was to purchase headphone manufacturer Ultimate Ears for $34 million to bolster its own audio equipment offerings. This was quickly followed by a second acquisition in November of SightSpeed, a video-conferencing software specialist that the company felt would be a good tie-in for its popular range of webcams, which cost the company another $30 million.
While the acquisitions have certainly helped the company branch out from its PC-centric market – especially helped by a contract with Dell that saw the SightSpeed software used as the basis for its Video Chat service – the $64 million expenditure is preying heavily on Logitech's bottom line – resulting in a drop in income from $133.6 million for Q4 2007 to a minuscule $40.5 million this year. The company's margin dropped too, from 36.9 percent to a tight 29.9 percent.
In order to bring margins back up to a healthier level, the company is looking to cut between 550 and 600 jobs around the company. Whether these job cuts include either of the recently acquired companies is unknown.
Do you hope that Logitech can weather this storm? Have you got any ideas for new products that might get the income flowing again? Share your thoughts over in the forums.
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Sad day for Logitech. Hope they'll get better.
I also saw recently they did computer CCTV cameras, specially for home, and some other strange stuff. I guess it's the "non PC-centric market".
And margins dropping by 7% isn't anywhere near as bad as the situation that some companies are finding themselves in.
They'll be getting a wodge of my cash once they start actually shipping the G13 - I've had it on preorder since before Christmas!
this has probably cost them a fair amount of money, although in the long run it should work out alright for them. IMO they're second to none with their peripherals*, especially mice, and i freakin' LOVE my squeezebox network. Got a Harmony One on the way to me now, so let's see if i don't love that too :D
*notable exception: nothing beats the MS natural ergonomic 4000 keyboard.
This is a luxury items company, that is still making profit in times of crysis, while buying other companies on the side. This is a great result, and should be celebrated, not whined about!
They quote a 70% decline in profit, and in the same press release announce 600 people fired, even though the REAL decline in profit (without their acquisitions) is only about 25%. If you are going to fire people, fine, but dont do it under false pretenses! I hate hate HATE the corporate assholes that make this ort of **** up, they just deeply impacted 600 lives!
Dont get me wrong, i love logitech stuff, i have about 300 euros worths of mouses, etc of them, but this sort of stuff just ticks me off!
It's really too bad if yakyb is right, because companies realize that and start making stuff that breaks after 2 years so they have recurring income....
double edged sword. that works for a while, until people realise, "hey, this stuff breaks after 2 years while company X products don't. i'm switching!"
it's far, far better to manufacture reliable, well-engineered products, and charge a premium for them, factoring in the fact that they will be longer lasting. this builds consumer loyalty, and when the time eventually rolls around for a replacement or upgrade, customers are more willing to pay the extra 10 quid for a mouse/remote/keyboard/whatever that isn't gonna crap out after one year and one day.
Gonna get mr a G19 and MX Revolution soon. Guild Wars 2 is almost out!
My only beef with logitech is when they replace a perfectly good product with another that's no better and sometimes not quite as good. Once a product is perfected leave it alone - I know it's not business sense as you need to keep releasing new product etc etc but I really would like another V400, it's better than the V450 IMO.
But a massive wave of layoffs doesn't seem terribly warranted. From an accounting perspective, they'll boost their financial situation in the short term. But from an economist's perspective, they're getting rid of a major set of assets, and may be hurting themselves in the long run. Good strategic decisions are based on economics rather than accounting.
I'm guessing they're either doing this because they're worried about the reactions from their shareholders, or because they were already planning on letting a number of people go, and this climate is a good cover.
...and Fod's totally right. Quality's generally the way to go.
Héhéhé
Gaming induced vocabulary distortions :')
It's an economic crysis here, copyrighted by crytek ;-)
Have a G15, G5 and G25
Loving all of it
They do buy some really cool companies, I bought a 3DConnexion SpaceNavigator for working in 3D programs (SketchUp, SolidWorks, Inventor) and I would be lost without it
Thank you logitech, for having a wonderful customer service department that knows their shizit off the top of their heads rather than in a manual.