Logitech wields axe as profit plummets
Swiss electronics manufacturer Logitech's profits fell 44 percent last year, the firm said on Thursday, adding that it had cut two executive positions in a bid to reverse the slide.
Logitech said net profit for its year to March 2012 fell to $71 million (53.9 million euros) from $128 million the year before.
The mouse, keyboard and webcam maker reacted with a restructuring plan that eliminates the positions of president of Logitech Europe and senior vice president of worldwide sales and marketing.
"To get back to sustained, profitable growth, we need to be simpler, faster and more consumer-centric," Logitech's new president Bracken Darrell said in a statement.
"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."
Operating income fell 50 percent to $72 million, Logitech said. Sales held steady at $2.32 billion, against $2.36 billion the year before.
Sales were down seven percent in the Americas and two percent in Europe, the Middle East and Africa but rose 18 percent in Asia -- including a 58-percent jump in China.
Fourth-quarter profits came in at $28.3 million, up from $2.8 million the year before, beating the average forecast of $14.4 million by analysts polled by the financial firm AWP.
Investors appeared to welcome the restructuring plan. Logitech shares were up 11.5 percent to 7.89 francs ($8.65) in midday trading on the Swiss stock exchange, which was down 0.43 percent overall.
Darrell estimated the restructuring would trim $80 million a year in operating costs and said it would be mostly complete by the end of the quarter.
The Harvard business school graduate was named Logitech president in March, taking over after the July 2011 departure of former president and chief executive Gerald Quindlen.
He currently reports to chief executive Guerrino De Luca but is due to take over the top job in January.
Analysts at the investment group Vontobel said the restructuring and cost-cutting would help boost profits but would be a long-term undertaking.
"Logitech has begun a repositioning process that according to our estimates will likely last at least a year," Vontobel said in a statement.
Logitech did not give a results forecast for the current year.
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