Why Logitech Shares Sank

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of PC peripherals specialist Logitech International (NASDAQ: LOGI  ) plunged as low as 10% today after the company's quarterly results disappointed Wall Street.

So what: Logitech shares have been beaten over the past couple of years on rapidly declining PC demand, and today's third quarter -- a loss of $195 million on a 14% revenue drop -- suggests that things aren't turning anytime soon. While management has tried to adapt steadily to the increasingly mobile world, the recent string of poor results seems to be forcing them to take more drastic measures.

Now what: Management said that it has already started to divest the remote controls and digital video security segments, and plans to discontinue other non-strategic lines -- speaker docks, gaming gear, etc. -- by the end of 2013. "We are developing more mobility-related products, leveraging the powerful growth of tablets and smartphones," said CEO Bracken Darrell. "We intend to sustain our leadership in PC platform-related products where we have engineering, distribution, and scale advantages." Of course, given the risk and uncertainty associated with such a tall turnaround, I'd wait on the sidelines until some solid strides are made.

Interested in more info on Logitech? Add it to your watchlist.

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  • Report this Comment On January 24, 2013, at 5:49 PM, prginww wrote:

    Lifesize teaser on their site for 29 Jan. new announcement

    i believe Logitech latest products announced for Cisco days ago correlate with possible Lifesize divestment

    Logitech problems in last 3 years are ex management didn't focus on Logitech core streagnth of mid-high line-ups, when they had a new Mouse like RX performance or new Gaming headset or THX Speakers....

    wrongly diverted the resources to non core business like Google TV Revue box, LifeSize / UC, cheap mice and remotes, etc while missed the tablets, smartphones, music, etc spaces that naturally fit Logitech.

    that is now changing with focus on Logitech, Logitech UE & Logitech for Business.

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