(By Mayur Pahilajani - iStockAnalyst Writer)
Fremont, CA - There are no signs of improvement in the technology sector as the industry awaits results from Logitech International (NASDAQ: LOGI), which is expected to post third-quarter report on Jan. 19.
Logitech's performance will be in the focus as the financial crisis forced the computer-mouse maker cut jobs for the first time in more than a decade. A company normally reduces the number of non-production or salaried employees when it requires saving costs and lower expenditures. The company will hand out pink slips to as many as 525 employees.
The sales of major firms like Logitech have also been marred by the tightening technology budgets set by the businesses and cut back by the consumers on their spending across the world. Most technology stocks have averaged in negative territory on weak earnings outlook for 2009.
The firm also abandoned its targets for the fiscal year 2009. The company had previously expected as much as 5 percent growth in operating income.
"We think that the market might well underestimate the severity of the likely earnings cuts," Christoph Gretler, an analyst with Credit Suisse, told Forbes. "Hence, we advise investors to stay on the sidelines."
The market analysts are now projecting the firm's earnings to be zero percent or break-even for Logitech in the fiscal year 2009 and some even have similar expectations for the year 2010, citing severance costs from the job cuts impacting future net incomes.
The technology companies have also been suffering due to lower sales in holiday season. The dismal selling season has been common for other sectors as well. Overall, the global markets have faced losses of trillion dollars in stock value on lowering liquidity in money markets.
The products sold by Logitech are generally inexpensive including its speaker systems, but they are sold in combination to expensive products like a high-end gaming system. “During the December quarter, the retail environment deteriorated significantly,” Gerald P. Quindlen, Logitech president and chief executive officer, said in a statement to analysts.
Romanel-sur-Morges, Switzerland-based Logitech mainly manufactures computer mice, keyboards and videogame accessories. The company also produces speakers for Apple Inc.’s iPod digital music player.
Quindlen has conceded that the company has experienced "varying degrees" of weakness across all geographies and channels as its customers reduced inventory levels in the face of weaker consumer demand.
"Moreover, we expect the economic environment to worsen in the coming months and we are therefore taking significant actions to align our cost structure with what is likely to be an extended downturn,” he added.
The investors must be caution about the stock as the company has not provided detailed information related to its sales and expectations. Moreover, the PC sales are being projected to decline this year, it would be better to watch the performance of the company's shares following the third-quarter results before committing a large investment.
Shares of the firm, which also has an office in Fremont, California, were moving down by 23 cents or 1.73 percent to $13.09 in morning session on NASDAQ market, after it closed at $13.32 yesterday.
The stock of the firm has traded as low as $11.10 and as high as $34.38 in the last 52-week period with average volume of 913,200.
