While many companies want to improve the proverbial mousetrap, Logitech International is more concerned with making a better mouse. The company is a leading maker of mice and other devices used with PCs and tablets, including joysticks, trackballs, digital pens, and keyboards. Its LifeSize subsidiary offers videoconferencing equipment that includes phones, webcams, microphones, and headsets. While Logitech does sell products directly to manufacturers -- including most of the world's largest PC makers -- the vast majority of its peripherals are sold to consumers through a global retail network.
Logitech's Ultimate Ears division develops in-ear monitors used by on-stage musicians and engineers. It also targets the consumer market with in-ear devices designed for use with portable music players. Logitech additionally provides Internet-based videoconferencing services through its video communications software unit, SightSpeed. The company also makes devices for popular third-party products like Apple's iPod, and gaming systems from Nintendo and Sony. In addition, Logitech offers a line of universal remotes used to control multiple electronic devices.
Customers located in the US account for 34% of sales. Logitech gets only a small amount of revenues from customers in Switzerland, its home country. The company has high-volume manufacturing operations in China that handle roughly half of its production; the company outsources the rest.
Revenue for Logitech was $2.3 billion in fiscal 2012, a decrease of about 2% over 2011. Retail sales were essentially flat (down 1%) on a 3% increase in unit sales offset by a 4% drop in average selling price. Logitech implemented a price drop in the second quarter of the year due to lackluster economic conditions in Western Europe and the Americas, and then exited certain product lines (primarily peripherals for Google TV). In Asia/Pacific retail sales were up 18%, led by a 58% increase in China. Sales to the OEM market were down 17%.
Adding to its woes, Logitech's 2012 profits fell 44% due primarily to lower gross margins on higher manufacturing and distribution costs, inventory adjustments, and a shift in mix of products sold toward those that cost less. Operating expenses increased as the company invested in China and in further development of its videoconferencing products lines, both key to its growth strategy. Shortly after releasing its fiscal 2012 financial results, Logitech announced plans to restructure to better align costs with business conditions and free up cash to invest in growth areas. While part of the strategy is to streamline its product offerings, the biggest savings (around 60% of an expected $80 million in savings a year) will come from the elimination of 450 jobs, a 13% reduction in workforce.
Logitech is targeting growth in video conferencing, unified communications, audio products, and peripherals for mobile products. Product development efforts for tablets and other mobile devices resulted in the Logitech Keyboard Case for the iPad 2 and wireless portable speakers. The company also believes that its LifeSize family of videoconferencing products will enjoy more growth. Geographically, Logitech is looking to expand its presence in emerging retail markets such as India, Latin America, and Russia, in addition to China.
Logitech has used acquisitions to build its videoconferencing product line. The company purchased Milan-based mobile videoconferencing software developer Mirial in 2011 to tap the booming global smartphone market. In 2010 the company bought the assets of Norway-based network firewall and network address translation product maker Paradial to enable more reliable video communications over secured networks. The purchases bolstered its LifeSize Communications subsidiary, which it acquired in 2009 for $405 million. LifeSize's products include the Passport, a small business videoconferencing system touted as a less expensive alternative to similar equipment from Cisco Systems and Polycom. – less
3 salaries reported
$153,167 per year
3 salaries reported
$131,055 per year