Logitech sees strong Q4, adds to recovery hopes

NEW YORK/ZURICH: Logitech, the world's largest computer mouse maker, expects double-digit sales growth in the next three months as people spend more on computer accessories, adding to hopes the technology sector is recovering.

The maker of speakers, webcams and keyboards smashed forecasts with a 43 per cent rise in third-quarter net profit to $57 million as demand picked up during the Christmas period.

“Q3 marks a turning point in our plan to emerge stronger from the economic downturn,” chief executive Gerald Quindlen said in a statement issued on Thursday.

“There were many highlights in the quarter, starting with improved sell-through in all of our retail regions, driven by the success of our new products across multiple categories.”

The group's shares have rallied strongly over recent weeks on hopes of improved demand over Christmas and traders said investors were now consolidating gains.

“Even though Logitech's top and bottom lines were undoubtedly boosted by a weakening U.S. dollar, these Q3 2009/10 results are clearly better than expected, suggesting Logitech did not suffer as much as we had been fearing from shoppers still demanding discounts," Helvea analyst Stefan Gaechter said.

Brightening prospects

Consumers slashed spending on computer accessories during the downturn, but the group is now benefitting from its recent product launches.

Signs are mounting that the technology industry is on the road to recovery after recent upbeat comments from such groups as Intel Corp and Samsung.

Logitech said it expected sales of between $500 million and $515 million in the fourth quarter, up from the $408 million posted in the previous year.

It forecast a gross margin of around 34 percent in the fourth quarter after it rose to 33.9 percent in the third quarter from the 29.9 percent posted a year earlier.

Sales for the third-quarter fell 2 percent to $617 million. Excluding the favourable impact of exchange rate changes, sales decreased by 7 percent.

The group expects fourth-quarter operating income to be in the range of $15 million to $20 million. This includes the amortisation impact of the intangible assets of LifeSize Communications, which Logitech bought last year.