Swiss computer equipment producer Logitech (NASDAQ:LOGI) reports its fiscal third-quarter 2007 earnings after the close of the market Wednesday. Want to know what Wall Street expects to see? Read on. Want to know what really matters? Read on a bit more.

What analysts say:

  • Buy, sell, or waffle? A dozen analysts follow Logitech, just one more than last quarter -- but my, how the sentiment has reversed! Buy ratings now outnumber holds 2 to 1.
  • Revenues. On average, analysts estimate 18% sales growth, to $676.3 million.
  • Earnings. Profits are predicted to run up 30% to $0.47 per share.

What management says:
Despite predicting "substantial" gross margin improvement a couple of quarters ago -- and delivering in Q2 -- CEO Guerrino De Luca was looking for just "slightly higher" margins in the second half of the year, and about 32% for the year's average gross. No more. After seeing the results of its blowout second quarter, De Luca upped the ante -- and guidance for sales, profits, and gross margins -- for the rest of this year. We're now looking for at least 17% sales growth, 20% to 25% better operating profits, and a gross margins of 33% or better.

What management does:
Was last quarter a fluke, or Logitech's turning point toward an upswing? It takes time to form a new trend, but the Q2 numbers sure looked propitious. In one fell swoop, the firm reversed the trend of deteriorating rolling gross and operating margins, as its net continued to march higher.

Margins %

6/05

9/05

12/05

3/06

6/06

9/06

Gross

33.5

33.1

32.3

32.0

31.7

32.5

Op.

11.3

11.2

11.0

11.1

10.9

11.5

Net

9.9

9.9

9.8

10.1

10.2

10.4
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Last quarter, Logitech debunked my main reservation about its business, and did so with authority. Not content to just grow sales faster than inventories, the firm actually sold its inventories down by 3% as sales soared. Admittedly, accounts receivable continue to outpace sales growth, and that still concerns me. But who knows? Tomorrow, perhaps Logitech will find a way to lay that worry to rest as well. I'll be watching.

Competitors

  • Mad Catz Interactive (AMEX:MCZ)
  • Microsoft (NASDAQ:MSFT)
  • Nam Tai Electronics (NYSE:NTE)
  • Plantronics (NYSE:PLT)
  • Sony (NYSE:SNE)
  • Universal Electronics (NASDAQ:UEIC)

What were we expecting from Logitech last quarter, and what did it produce? Find out in:

Fool contributor Rich Smith does not own shares of any company named above. Microsoft is an Inside Value pick. The Fool has a disclosure policy.