Join        Login             Stock Quote

Logitech Q3 Preview: PC Weakness Should Weigh On Earnings

 January 22, 2013 08:57 PM

(By Mani) Logitech International SA (NASDAQ: LOGI) is expected to report a 3 percent drop in earnings on 6.5 percent drop in sales when it reports its third quarter results on Jan.23.

Switzerland-based Logitech  is known for computer mouse and other electronic peripherals, and is finding it difficult to diversify its core business from PCs as tablets are replacing notebooks and desktops.

The company had warned of continued strong headwinds in all of its PC-related categories in the second half of 2013. Moreover, it expects the weakness to more than offset the positive impact of new product launches. The company added that it now expects sales and operating income for the second half to be below that of the year-ago period.

[Related -Logitech (LOGI): A Mouse That Could Roar]

Wall Street, on average, expects Logitech to report earnings of 31 cents a share on revenue of $667.87 million, according to analysts polled by Thomson Reuters. In the same period last year, LOGI earned 32 cents a share on revenue of $714.60 million.

During the past four quarters, the company's earnings have managed to top Street view twice. The consensus view has come down from 40 cents in the past 90 days.

Quarterly revenues are expected to remain almost flat with last year at $1.13 billion, driven by competitive pressures and weak carrier spending. The company has recorded single-digit revenue drop three times in the preceding four quarters

For the second quarter ending Sept. 30, Logitech reported net income of $54.87 million or 35 cents per share, up from $17.45 million or 10 cents per share in the prior-year quarter. Results for the latest quarter included a net tax benefit of $32 million from the closure of an income tax audit. However, net sales for the quarter decreased 7 percent to $547.69 million.

[Related -Another Big Day With Strong Gains And Positive Technicals]

Investors and analysts would look for company comments on its strategy to boost its non-PC business and revive its PC-related sales. Logitech has taken baby steps in the tablet market by providing accessories such as iPad cases and keyboards, but that may not help the company in stemming the sales drop.

In the conference call, analysts could ask whether it is seeking any disposal of non-core assets such as videoconferencing tool LifeSize as the move may strengthen the balance sheet. Such potential proceeds could be either returned to shareholders in the form of dividends or share buybacks.

In addition, the PC weakness could spread into the fourth quarter as well, with analysts expecting 29 percent drop in earnings and 2.9 percent drop in sales.

As a result, iStock believes that investors should remain on the sidelines until the company records significant upside in its non-PC business, which that may not happen in the near-term.
iOnTheMarket Premium


Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:

rss feed

Latest Stories

article imageWill The Sluggish US Housing Market Perk Up This Year?

Housing remains a weak spot for the US economy, as suggested by yesterday’s news of a bigger-than-expected read on...

article imageThe Only Homebuilders To Own Right Now

Now is the time to invest in the housing market, but you must be read on...

article imageUS Economic Growth Slows in Q4

US GDP growth fell short of expectations in last year’s fourth quarter, the government reports. National read on...

article imageReversals After a Gap on the Open Could Mean Anything

Yesterday stock indexes gapped up on the open but then reversed course to close sharply lower. This type of read on...

Popular Articles

Daily Sector Scan
Partner Center

Related Articles:

Spectacular Day On The Street
More Articles on: Computer and Technology

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.