ZAGG Takes the Next Logitech Step

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Fellow Fool Shubh Datta recently wrote about how well ZAGG (Nasdaq: ZAGG  ) had performed in 2010, and said it remained to be seen how well it would fare in 2011. In 2010, ZAGG profited greatly from the blockbuster launches of Apple's (Nasdaq: AAPL  ) original iPad and iPhone 4. But just three weeks ago, Apple surprised many when it launched the innovative new Smart Cover along with the iPad 2, dealing a massive blow to ZAGG's tablet protector, the ZAGGmate.

But, there is hope for the ZAGGmate.

ZAGG has entered into a deal with Logitech wherein Logitech (Nasdaq: LOGI  ) will manufacture and market the ZAGGmate along with its keyboard worldwide, under the name Logitech Keyboard Case. ZAGG will continue selling the ZAGGmate for both versions of the iPad online. My guess is that the deal will help ZAGG roll with the punches and continue growing strongly, riding the success of tablets, and providing strong returns for shareholders going forward.

What the deal means?
Before the release of Apple's Smart Cover, the ZAGGmate had really started to penetrate a market that was growing explosively. But the availability of the Smart Cover along with the iPad meant that many potential consumers would no longer look to ZAGG to provide them a protective cover.

The deal with Logitech will give the ZAGGmate and its company some sense of relief from what must have been a most unwelcome development. The deal offers ZAGG access to a much larger market as Logitech operates in more than 100 countries the world over. The agreement also gives ZAGG the ability to increase its presence worldwide under the world-renowned banner of Logitech, which is a well-established brand.

What can ZAGG expect?
ZAGG recorded revenues of $76.1 million in 2010, which was a 98.5% increase over the previous year. This was primarily due to the success of its flagship product, the InvisibleSHIELD, which is a protective shield used with iPads, iPhones, and many other handheld tech gadgets. ZAGG looks to have strong opportunities for additional gains in the year ahead as the ZAGGmate gets a much wider market to operate in and as new tablets are launched by companies such as Research In Motion (Nasdaq: RIMM  ) , Dell (Nasdaq: DELL  ) , and Motorola Mobility (NYSE: MMI  ) .

The Foolish bottom line
Getting access to a much wider market will definitely help alleviate fears that Apple's aggressive push into the casing market will shut out third parties like ZAGG. Also, it might allow Logitech and ZAGG to work together and create more innovative products, hence diversifying its product portfolio. It'll be interesting to see how ZAGG will capitalize on the vast market presence of Logitech. All things considered, the signs look good in 2011 for ZAGG.

Looking to stay updated on ZAGG? Add the company to our new, free watchlist service today!

Sarosh Nicholas doesn't own any shares of the companies listed above. Apple is a Motley Fool Stock Advisor recommendation. Logitech International SA is a Motley Fool Hidden Gems pick. The Fool has written puts on Apple. Motley Fool Options has recommended a bull call spread position on Apple. Motley Fool Options has recommended a write covered call position on Logitech International SA. The Fool owns shares of Apple and Logitech International SA. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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  • Report this Comment On April 13, 2011, at 3:02 PM, Natolx wrote:

    What are your thoughts on the ridiculously high (40%+) short interest in ZAGG as of March 28?

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