Logitech's Q4 and full-year report makes for uncomfortable reading. Despite profits increasing by a factor of nine in the last quarter of the year, overall annual profit fell 44 percent from $143 million to $71 million. The company has already parachuted in former Whirlpool exec. Bracken P. Darrel to turn things around and recover the losses made when the company went big on Google TV. His first action has been to kick-start a restructuring operation that will save $80 million in costs, starting by cutting a whole management layer -- demoting current product VP Junien Labrousse and firing sales VP Werner Heid. Mr. Darrell is now working directly with his team on a new lineup of "stronger" products to be unveiled later this quarter, with an emphasis on Windows 8 peripherals and LifeSize video conferencing gear.
[Image credit: Wikimedia Commons]
Logitech Announces Fourth Quarter and Full-Year Financial Results for FY 2012
New President Initiates Transformation to Simpler, Faster, More Consumer-Centric Company, Including Restructuring
NEWARK, Calif. - April 25, 2012 and MORGES, Switzerland, April 26, 2012 - Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced financial results for the fourth quarter and full year of Fiscal Year 2012.
Sales for Q4 FY 2012 were $532 million, down 3 percent from $548 million in Q4 FY 2011. Excluding the unfavorable impact of exchange rates, sales decreased by 2 percent compared to the prior year. Operating income was $24 million compared to $4 million in the same quarter a year ago. Net income for Q4 FY 2012 was $28 million ($0.17 per share) compared to net income of $3 million ($0.02 per share) in Q4 of FY 2011. Gross margin for the quarter was 36.4 percent compared to 32.8 percent in the same quarter one year ago.
Logitech's retail sales for Q4 FY 2012 decreased year over year by 2 percent, with an increase in EMEA of 13 percent, an increase in Asia of 12 percent, and a decrease in the Americas of 17 percent. OEM sales decreased by 9 percent. Sales for the LifeSize division decreased by 10 percent.
For the full fiscal year, sales were $2.32 billion, compared to $2.36 billion in FY 2011. Operating income was $72 million, down 50 percent from $143 million a year ago. Net income for the full fiscal year was $71 million ($0.41 per share), down 44 percent from $128 million ($0.72 per share) in FY 2011. Gross margin for FY 2012 was 33.5 percent compared to 35.4 percent in FY 2011.
"I look forward to leading Logitech to improved performance," said Bracken Darrell, Logitech president. "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. With board approval, I have eliminated a layer of business and sales executive management; the leaders of our business groups and sales regions now report directly to me. In addition, we will consolidate brand management and product portfolio management under the leadership of the business groups, and streamline most other functions. I expect most of this restructuring to be completed by the end of the current quarter, freeing up resources to pursue our growth opportunities. The restructuring should result in a reduction of approximately $80 million in annual operating costs."
"I believe the organizational streamlining that Bracken is driving is a decisive step for Logitech's future," said Guerrino De Luca, Logitech chairman and chief executive officer. "Looking ahead, I am also excited about what I believe is a strong lineup of new products with a much clearer value proposition to consumers. We expect that increasingly differentiated products will provide strong up-sell opportunities across all of our businesses. The majority of these new products will launch in Q2."
The company expects to benefit from a stronger product portfolio, the simplification of the organization and processes, and cost savings from the restructuring, resulting in improved financial performance in the second half of Fiscal 2013.
Logitech Announces Changes in Executive Management
Elimination of Executive Layer is Part of President Bracken Darrell's Initiative to Transform Logitech into a Simpler, More Consumer-Centric Company
NEWARK, Calif. - April 25, 2012 and MORGES, Switzerland, April 26, 2012 - Logitech International (SIX: LOGN) (Nasdaq: LOGI) today announced that the company has eliminated two executive management positions as part of its transformation strategy, which includes a plan to restructure the company, announced separately today.
The position of executive vice president of the products group and president of Logitech Europe, held by Junien Labrousse and reporting to Logitech President Bracken Darrell, has been eliminated. The leaders of the individual business groups, which formerly reported to Mr. Labrousse, now report directly to Mr. Darrell. Mr. Labrousse has assumed the role of senior vice president of the business group responsible for PCs, Macs and tablets.
The position of senior vice president of worldwide sales and marketing, held by Werner Heid and reporting to Bracken Darrell, has been eliminated. The leaders of each of Logitech's sales and marketing regions now report directly to Mr. Darrell. Due to the elimination of his position, Mr. Heid will be leaving Logitech effective May 15, 2012.
"These changes enable me to work more closely with our product and sales teams," said Bracken Darrell. "Together, we can become more responsive to the changing needs of today's consumers as we address new opportunities with greater speed and flexibility.
"I would like to thank Werner Heid for his contribution to Logitech over the last three years. His talent and expertise have helped the company navigate through challenging times. Werner strengthened Logitech's market position in key developed markets and provided the foundation for our growth opportunities in emerging markets."
Details regarding the changes in executive management, including related changes in compensation, are included in a Current Report on Form 8-K to be filed with the Securities & Exchange Commission.