Local Logitech management in Australia don’t like talking about their poor performance after parting Company with Harvey Norman, nor will they explain the reasons behind their online strategy despite the Company issuing their fourth profit warning in 12 months.Last night shares in the Swiss Company plunged 14% after they announced profits had fallen by $10 million to $55 million and its revenue from $754 million to $715 million. A former senior Logitech manager who quit Logitech Australia late last year has admitted the Harvey Norman exit had cost the Company sales.
The fall in sales comes as consumers dump traditional Logitech categories such as audio attach for new brands such as Edifier.
Also impacting Logitech is the introduction of touch screen technology which has seen consumers move to tablets which don’t need a mouse.
Another category that is under threat is webcams due to improvements in built-in webcams for notebooks and the introduction of webcams into smart TVs.
Analysts claim that a move to better quality built in web cameras has created problems for Logitech, which had a harder time justifying its higher-quality technology to those who already had a camera in their systems.
In the remote control market, Logitech, who acquired the Harmony remote business, is witnessing slow sales due to a move to touchpad applications to control TVs. In 2012 several TV vendors will launch new voice activated remote controls while others will give away 7.2 inch tablet controls.
Logitech said that Harmony remote sales at the mid- to high-end were down 30 percent, although the low end was doing well and a refresh of the more advanced models was due in the “coming months,” CEO Guerrino De Luca said.
Logitech was also a victim of Google TV V1 and while no direct unit numbers were given for Google TV sales, the Company has introduced a drastic price cut for the their Google TV Revue set top box which was not launched in Australia.
Logitech had previously reduced its sales expectations in July and September last year, and now they have reduced the numbers again before releasing its figures for its 2011 fiscal year.
Logitech now expects annual sales of $2.3 billion, down from the previously anticipated $2.4 billion. Operating profit is now seen at $60 million, down from the previous outlook of $90 million.
Chairman Guerrino De Luca, who is acting chief executive, said several factors had changed since September, leading him to revise his statement. He also said there would be no further downgrades.
“Webcams and remotes continue to be negatively impacted more than expected by product portfolio and market weakness,” De Luca said.
“The results and the profit warning were disappointing. It is going to be a tough job to change the business model,” said Stefan Gaechter, an analyst at Helvea.
Logitech is suffering as a result of the rise of tablet computers, which soared 260% to 66.9 million units in 2011, according to figures from research firm Strategy Analytics.
Logitech has been launching new products which are compatible with tablet computers such as keyboards, but the company still faces problems with falling sales of their products.
“Large categories such as cordless mice and cordless keyboards, including those for tablets, achieved strong year-over-year sales growth, despite the product gaps that exist across many of our retail categories,” De Luca said.
De Luca, who was CEO at Logitech from 1998 to 2008, resumed control in July after Logitech announced a $29.6 million net loss for the first quarter of its 2012 fiscal year.
