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Logitech Q4 Profit Surges, Tops View; President Initiates Restructuring

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4/25/2012 11:23 PM ET

Computer interface devices manufacturer Logitech International S.A. (LOGI: Quote) reported Wednesday a profit for the fourth quarter that surged from last year, reflecting significantly improved margins amid profitability improvements in EMEA sales region. Earnings per share for the quarter topped analysts' expectations, while quarterly revenues missed their estimates.

Looking ahead, the company's new President Bracken Darrell has initiated a transformation to be a simpler, leaner, faster, and more consumer-centric company to return to sustainable, profitable growth through restructuring.

As part of the restructuring, the company is looking to reduce cost base by aligning its costs with the current size of its business. The company has eliminated a layer of product and sales executive management, with leaders of the product groups and sales regions now reporting directly to Darrell in order to enable him to work more closely with the product and sales teams.

The company expects to benefit from new products launches, the simplification of the organization and processes, as well as cost savings from the planned restructuring, and anticipates improved financial performance in the second half of fiscal 2013. The restructuring should result in a reduction of about $80 million in annual operating costs, the company said.

"I look forward to leading Logitech to improved performance. To get back to sustained, profitable growth, we need to be simpler, faster and more consumer-centric. Some of this transformation has already begun, with the management team's work to reinvigorate the product portfolio. We now need to simplify the organization through restructuring," Darrell said in a statement.

The Apples, Switzerland-based company reported net income of $28 million or $0.17 per share for the fourth quarter, sharply higher than $3 million or $0.02 per share in the prior-year quarter.

On average, three analysts polled by Thomson Reuters expected the company to report earnings of $0.07 per share for the fourth quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter decreased 3 percent to $531.96 million from $547.62 million in the same quarter last year, but missed three Wall Street analysts' consensus estimate of $538.37 million. Excluding currency impact, sales decreased 2 percent.

Net sales through retail channel declined 2 percent to $455.40 million from the year-ago quarter. Retail sales grew 12 percent in the Asian region, and rose 13 percent in Europe, Middle East and Asia or EMEA region, while it dropped 17 percent in the Americas region.

Sales to OEMs decreased 9 percent to $40.99 million from the prior-year quarter, and sales for LifeSize Communications, acquired in December 2009, dropped 10 percent to $35.57 million from last year.

Among the product families sold through retail channel, three of the six products posted sales growth, with pointing devices continuing to be the best performing category in terms of contribution, followed by audio products and then keyboard & desktops.

Gross profit margin for the quarter expanded 360 basis points to 36.4 percent from last year's 32.8 percent, primarily due to significant profitability improvements in our EMEA sales region.

For fiscal 2012, The company reported net income of $71.46 million or $0.41 per share, lower than $128.46 million or $0.72 per share last year. Net sales for the full year edged down to $2.32 billion from $2.36 billion a year ago. Street was looking for full-year 2012 earnings of $0.32 per share on annual revenues of $2.32 billion.

LOGI closed Wednesday's regular trading session at $7.79, up $0.02 or 0.26% on a volume of 1.02 million shares. The stock surged a further $0.50 or 6.42% in after-hours trading.

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by RTT Staff Writer

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