Logitech exits OEM mouse production
Logitech shared that their quarterly operating profit fell 34 percent, mainly due to a shrinking demand for accessories like the computer mouse. The mice and keyboard business are declining, Logitech said it will exit a low-margin business that mainly makes computer mice for PC makers to sell as their own.
Logitech will be increasing prices outside the US to compensate for the currency declines, espoecially the USD - EURO conversion is expensive. For European customers this means price increases of up-to 13 percent across the board.
It reported operating profit of $14.5 million for the quarter ended March 31, compared to $21.8 million a year ago, due to pockets of sales strength, lower costs and fewer restructuring charges. Net sales in the March quarter fell 4.7 percent to $467.2 million, at the high of estimates.
Logitech has at best managed slow sales growth for six of the past seven years. However, underlying demand for new products and action to cut costs and raise prices are positioning it for sustained growth in coming years, it said.
Shares of the Lausanne-based company traded up 2.2 percent at midday on the Zurich stock exchange, following the report.
Once Logitech exits the declining computer mouse manufacturing business, underlying sales results from are set to show sustained sales growth in constant currency terms, Chief Executive Bracken Darrell said in an interview.
"This (retail business) is going to be the bulk of our business going forward," Darrell said. "What we are announcing today is the simplifying of our story."
Excluding currency swings, sales nudged up 1 percent. Logitech's retail business, which generates 90 percent of sales, grew 7 percent in constant currency. Importantly, newer growth categories on which it is betting its future business, grew 45 percent and now make up nearly one-third of its retail business.
Darrell, who has moved Logitech into new product lines while cutting costs in older product areas, said Logitech was prepared to increase prices to offset currency declines.
"We are raising prices around the world," Darrell told Reuters, referring to markets outside the United States. The price increases will take effect in this quarter," he said.
The CEO said he believes the company commands pricing power in many of its accessory lines including what is now its best-selling product line -- wireless Bluetooth speakers. It plans to raise prices around 11 to 13 percent in Europe, for example.
More than half of Logitech's costs and expenses are in U.S. dollars and roughly 10 percent are in Swiss francs while it relies on suppliers in Asia, where currencies have been stable, to source most of its hardware. (1 Swiss franc = $1.0314) (Reporting by Ismail Shakil and Narottam Medhora in Bengaluru; Editing by Keith Weir)
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Senior Member
Posts: 9797
Joined: 2011-09-21
Well they already pulled out of console peripherals I guess they want to reduce their market share more to drive up profit margin, even though this will not increase overall profit.
SMH in a few years it will be RIP Logitech.
Honestly they are not the company they used to be. Just go on their forums.
Senior Member
Posts: 813
Joined: 2009-11-30
nowdays in business
promoting/marketing > product quality
lots people got eaten by fancy promotion stuff
look razer crap product (no offense, but all razer product i own never last long), their product keep selling well, especially people just go with looks rather than quality
well logitech actually not that far better than other peripheral company, but at least their product i use last abit longer
and combined with good pricing, that what make their product value i guess
Senior Member
Posts: 2809
Joined: 2011-05-17
Is it so hard to believe that a company, whose business was built as a computer peripherals manufacturer, is obviously showing the repercussions of the massive shift away from traditional desktops. Laptops are going to follow as well. Mainstream is all about tablets and phones.
The tablet and phone peripheral market is overcrowded already. They are now a niche market manufacturer. They either are going to adapt to that business model or die.
Senior Member
Posts: 2477
Joined: 2010-05-26
They make mice so well that i bought a MX518 about 6-7 years ago and have never really owned another mouse, the first mouse i ever owned was some crappy MS 2 button roller ball thing.
I have been to friends houses and used Razors but like others have stated here they don't feel the same and to me feel cheap and slippy.
So 7 year old MX518 with crazy amount of usage since i'm @ my PC maybe 14 hours a day on average and done many all nighters when good games came out, which doesn't happen no more these days.
Still this MX518 has good Teflon feet left, only had to re-glue them because they moved about so i super-glued them back into position about 3 years ago and they are still fine.
Pretty amazing really, maybe that's why they don't make much profit.
Senior Member
Posts: 283
Joined: 2013-11-21
Maybe correct if you're using Gollem's dictionary, mmm yesss, Logitech mices are the prescciooouuuussssss
(I do believe you mean mouses, which is falling out of common parlance as most people prefer to use "computer mice", mostly because it sounds better)