Wednesday, January 21, 2009

Logitech's income drops 70 percent

More bad news for anyone employed in the tech sector, with peripherals manufacturer Logitech announcing a whopping 70 percent drop in net income – and a series of job cuts to bring things back in line.

According to figures quoted by BetaNews yesterday, the company is facing a massive slump in income for the last financial quarter – not helped by some acquisition initiated before the scale of the global economic slowdown was apparent.

Back in August last year Logitech announced that it was to purchase headphone manufacturer Ultimate Ears for $34 million to bolster its own audio equipment offerings. This was quickly followed by a second acquisition in November of SightSpeed, a video-conferencing software specialist that the company felt would be a good tie-in for its popular range of webcams, which cost the company another $30 million.

While the acquisitions have certainly helped the company branch out from its PC-centric market – especially helped by a contract with Dell that saw the SightSpeed software used as the basis for its Video Chat service – the $64 million expenditure is preying heavily on Logitech's bottom line – resulting in a drop in income from $133.6 million for Q4 2007 to a minuscule $40.5 million this year. The company's margin dropped too, from 36.9 percent to a tight 29.9 percent.

In order to bring margins back up to a healthier level, the company is looking to cut between 550 and 600 jobs around the company. Whether these job cuts include either of the recently acquired companies is unknown.

Do you hope that Logitech can weather this storm? Have you got any ideas for new products that might get the income flowing again? Share your thoughts over in the forums.

0 comments: