Logitech profit jumps on Sony sales

Josiane Kremer

ZURICH: Logitech, the world's top maker of computer mice, posted a forecast-beating 65 percent rise in third-quarter profits driven by strong sales to Sony Corp. and new products.

The Swiss-American firm raised its full-year sales forecast to above $1.24 billion after record sales of cordless products and strong growth in webcams and games consoles in the quarter to the end of December.

Fighting tougher competition with cost cuts and aggressive marketing, the firm stuck by its forecast of 15 percent higher 2003/04 operating income. It is targeting 10 percent growth in 2004/05 sales and another rise in 15 percent operating income.

Operating income in the quarter was $65.3 million, up 29 percent. Analysts had expected operating income of $60 million.

In the quarter, which includes the crucial Christmas season and typically accounts for some 30 percent of full-year revenues, net profit was $66.8 million, or $1.35 a share, compared with $40.4 million, or 80 cents, a year ago.

Excluding a one-time tax break of $13.4 million, Logitech earned $53.5 million on 16 percent higher sales of $410 million.

"(These are) very strong results," said Julius Baer analyst Roger Steiner, adding he expected the share to get a boost.

Logitech has posted two forecast-beating sets of quarterly results since July, when it issued a shock profit warning, sending its shares tumbling and denting investor confidence.

"They continue on the path they started on after the profit warning. It certainly takes a couple of quarters to restore confidence and trust and that is what they are now working on," Steiner said. He has a "buy" rating on the stock.

The results boosted the shares 3.5 percent at the opening to 63 Swiss francs, building on a 14 percent gain this year and a 30 percent increase in 2003.

Despite the positive results, one analyst recommended taking profits in the stock as most of the good news was already priced in. By 0920 GMT, Logitech shares stood just 0.25 percent higher at 61 francs.

Original equipment manufacturer sales rose 39 percent, fuelled by sales to Sony of products such as the EyeToy camera for PlayStation 2.

Retail sales were up 12 percent, with cordless desktop products up 37 percent, console gaming products up 174 percent and webcams up 26 percent.

© Reuters