Logitech International SA (LOGI) reported fourth-quarter fiscal 2011 earnings per share of 2 cents, below the Zacks Consensus Estimate of 6 cents and prior-year earnings per share of 14 cents.
Earnings per share for fiscal 2011 came in at 72 cents, below the Zacks Consensus Estimate of 76 cents but well above fiscal 2010 earnings per share of 36 cents.
Total Revenue
Total revenue was $548 million, an increase of 4% year over year and up 3% on a constant currency basis.
For fiscal 2011, total revenue increased impressively by 20% to $2.36 billion, driven by LifeSize division and good retail sales in Asia and America. However, the company’s performance in the last quarter was below expectations as there was low demand for Logitech products in the EMEA.
Sales By Division
Retail sales for the quarter increased by 2% year over year to $463.2. Retail revenue was up 32% in Asia, 11% in Americas but down 17% in the EMEA. Sales of pointing devices were $146.2 million (up 3.9%) and keyboards and desktops sales were $104.9 million (up 21.3%).
OEM sales declined by 10%. Record sales was achieved in the LifeSize division, increasing by 88%.
Income and Expenses
Gross margin for the quarter was 32.8%, down from 35.8% in the prior-year period. Operating income for the quarter was $3.6 million, down 87% year over year.
For fiscal 2011, operating income increased impressively by 82% to $142.7 million. Gross margin for the year was 35.4% versus 31.9% in fiscal 2010.
Balance Sheet & Cash Flow
Cash and cash equivalents at the end of the year was $477.9 million with shareholder’s equity of $1.2 billion. Net cash from operating activities was $154.8 million in fiscal 2011 compared with $365.3 million in fiscal 2010.
Outlook
Logitech expects to generate sales of about $2.6 billion in fiscal 2012. Operating income is expected to be $185 million and gross margin to be approximately 35%.
The Logitech brand name and its industrial designs are recognized worldwide as a symbol of product quality, and are noted for innovation, ease of use and price-performance value. Product definition, technology and industrial design excellence, as demonstrated by various awards that its product designs continue to receive, make Logitech successful and competitive in product markets.
Logitech’s business depends in part on access to third-party platforms or technologies. It could, however, be adversely affected if access is withdrawn, denied or not made available on acceptable terms, or if the platforms or technologies change suddenly. The company needs to successfully innovate and market products for notebook PCs and mobile devices, failing which its business and results of operations may suffer.
Logitech International SA is a global leader in peripherals for personal computers and other digital platforms, developing and marketing innovative products in PC navigation, Internet communications, digital music, home-entertainment control, video security, interactive gaming and wireless devices. Major competitors of the company are Creative Technology Ltd. (CREAF.PK), Microsoft Corporation (MSFT) and Koninklijke Philips Electronics NV (PHG).
We currently maintain our Underperform rating on Logitech, with a Zacks #4 Rank (Strong Sell recommendation) over the next one-to-three months.
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