Logitech cuts off jobs to cope with costs

Swiss group Logitech, the world's largest computer mouse maker, said it planned to cut more than 10 per cent of annual operating costs, after weak comparatives helped quarterly profit beat expectations.

Logitech, which also makes speakers, webcams and keyboards, said on Thursday it planned to cut $80 million costs to boost profitability amid a soft euro and continuing weak economic environment.

Its shares were up 14 per cent at 0730 GMT.

Logitech removed a layer of business and sales management and plans cuts at most other functions by the end of the current quarter. It said it would unveil a detailed plan in early June.

"Relative to current operating profitability level, this is a massive cost saving plan," said one analyst who asked not to be named.

Logitech's fourth-quarter net income rose to $28 million, or 17 cents per share, from $3 million, or 2 cents per share, a year earlier, the company said. That compared with a forecast for $12.2 million in a Reuters poll.

"For the first time in a long time we exceeded expectations. It was a reasonable close to one of the worst years in the history of the company," chief executive Guerrino De Luca told Reuters.

Sales in Logitech's 2011-12 year to end-March slipped 2 percent to $2.32 billion and operating income halved to $72 million. Both beat the firm's several times lowered forecasts for $2.3 billion sales and $60 million profit.

In the January-March quarter, group sales fell 3 percent to $532 million but rose 13 percent in its largest region - Europe, Middle East and Africa (EMEA).

De Luca said there had been no major recovery in underlying demand in Europe, with Logitech benefiting from a weak comparison quarter, when it had stuffed retailers inventories. The inventory problem hurt sales for several quarters.

"The economy is bad (in Europe). Our channel partners are nervous," De Luca said. "Doing business in Greece and Southern Europe is not easy."

Sales at Logitech's video conferencing unit LifeSize shrank 10 per cent to $35.6 million as a major product transition hurt turnover. De Luca said the business remained one of the key growth opportunities.

Logitech said the launch of new products, the majority of which were expected by October, would drive growth in the second half of its current 2012/13 year.

source "Timesofindia"

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