The mouse I used while writing this article comes from Logitech International (NASDAQ:LOGI). Chances are, so does yours.
Logitech has long been the computer industry's most popular mouse-maker. But sales of the firm's other popular products -- such as wireless keyboards, speakers, and Web cams -- drove record increases for the fiscal third quarter of 2003. Sales ended up at $410 million, a 16% increase over last year's Q3, and gross margins ticked upward as well, increasing nearly 3% to 34.3%.
The bottom line looked even better. Excluding a tax benefit, net income rose to $53.5 million, or $1.09 a share. That's a 32% jump over the same period last year.
Logitech's products rule the shelves at places like Best Buy (NYSE:BBY), Circuit City (NYSE:CC), and Wal-Mart (NYSE:WMT), and that drove retail sales up a healthy 12% for the quarter. Investors should pay attention to the big gains in OEM sales, too. The nearly 40% growth in that market bodes well for the company, especially as game console makers and computer manufacturers begin selling a new generation of lifestyle-oriented PCs.
Gone are the days of ugly and functional. Products like Logitech's game controllers, wireless desktops, and surround-sound speaker systems are well positioned to take advantage of the trends in PC design and sales. This morning, the company reported that sales bookings for the first three weeks of January are up 50% over last year.
Logitech's balance sheet is solid, with a lot more cash than debt. (In fact, the company says it's shopping for possible acquisitions.) At $50 a stub, Logitech currently trades about 25 times trailing earnings and 21 times next year's estimates. That looks fair given the company's modest growth predictions for the upcoming fiscal year: 10% in sales and 15% in operating income. But it looks cheap compared to the multiples of bigger peers such as Dell, (NASDAQ:DELL), Apple (NASDAQ:AAPL), and Hewlett-Packard (NYSE:HPQ).
Prospective investors may wait in vain for a cheaper entry point. With popular products, solid finances, and a strong brand, Logitech looks like it has earned a premium price.
Wondering if you have enough hamsters running your old computer to power some new surround-sound speakers? Find out in the Fool's Help With This STUPID Computer discussion board.
You can have Seth Jayson's Logitech optical mouse when you pry it from his cold, dead fingers. Reach him at [email protected].
