Logitech meets our revenue estimates

Logitech International (LOGI) announced its results for the first quarter of FY2010. Sales for the quarter were $328 million, slightly ahead of our estimates. Excluding currency fluctuations, comparable sales declined by 33% year over year. 

Under retail products portfolio, remotes suffered largest fall in sales, managing to touch only 12.6% of the year-ago quarter’s level. Gaming devices achieved 56% while keyboards and desktops clocked 61% of sales recorded in the year-ago quarter. Sales of Original Equipment Manufacturer (OEM) segment was 60% of that in the prior-year quarter. Total net sales declined by 35% year over year in absolute terms. On a geographic basis, sales were down by 39% in EMEA, 37% in the Americas and 22% in Asia. 

Sales were negatively impacted by the combination of weak consumer demand and the accelerating reset by channel partners of their weeks of supply. A contributing factor to sales decline was the effect of the stronger U.S. dollar. Historically the amount of Logitech product carried by channel partners has been a function of the high sell-through rate of its products. With the continuing economic downturn, the sudden decline in the sell-through rate of its products resulted in channel partners significantly lowering their levels of required supply. 

The Company posted an operating loss of $33 million, compared to operating income of $30 million in the same quarter a year ago. The net loss for Q1 was $36 million ($0.20 per share) compared to net income of $29 million ($0.16 per share) in Q1 FY 2009. During the quarter, Logitech recorded pre-tax restructuring charges of $1.4 million ($1.1 million after tax or $0.01 per share). Gross margin for Q1 was 24.4 percent compared to 34.1 percent in Q1 FY 2009. 

For the second quarter of FY 2010, Logitech expects sales within the range of $465 million to $485 million, gross margin within the range of 27 percent to 29 percent, and intends to break even on the operating level. 

Logitech International S.A. (LOGI) 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. The company was incorporated in Switzerland and is headquartered in Freemont, California, USA. 

We continue to maintain our Hold recommendation on LOGI.