Logitech International (LOGI)

Logitech International S.A. (LOGI - Analyst Report) is a leading manufacturer and marketer of interface products for personal computers (PCs) and other digital platforms. The company's products include: Internet video cameras, mice and trackballs, keyboards, audio and telephony products, interactive gaming devices, and 3D controllers.

LOGI reported results for the third quarter of 2009 with weaker-than-expected revenues and earnings due to weakening demand, lower gross margin and higher effective taxes. The company currently assumes that this relatively weak macroeconomic environment will weaken further in the coming months. Its outlook anticipates that the economy will have an impact on the European consumer as well.

It plans to reduce global salaried workforce by between 550 and 600 employees and this is expected to generate annual cost savings beginning in 2010 of approximately $50 million. We now estimate that revenue and EPS will reduce by 2.5% and 26.5% respectively in 2009 compared to 2008.

We have downgraded LOGI to a Sell with a target price of $10.00.