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Computer gadgets boost Logitech profits

Speakers produced for the iPod have been selling well. Logitech

The Swiss company Logitech, the world's largest computer mouse maker, has posted its eighth consecutive year of record sales and profits.

This content was published on April 20, 2006 - 11:31

Sales for the year ending on March 31 were $1.8 billion (SFr2.29 billion), up 21 per cent over the previous fiscal year. Net profit rose to $181 million.

Fourth-quarter sales were $466 million, up 16 percent from $403 million for the same quarter period year ago.

"We are very pleased with the company's strong performance, and with our record-breaking results in the fourth quarter," Guerrino De Luca, Logitech's president and CEO, said in a statement on Thursday.

However, the maker of computer peripherals has a reputation for beating analysts' forecasts and traders were disappointed that the figures were barely ahead of average expectations.

Logitech benefited from increased popularity of communication over the internet, seeing strong sales of its speakers, headsets and webcams.

Retail sales of audio products in the fourth quarter were up 68 per cent. According to analysts, this category of peripherals produces a lower gross margin than mice and keyboards, weighing on the company's profitability.

Audio

De Luca acknowledged that the shift in demand for lower margin audio products (speaker sales were up 116 per cent) had hit the company's performance.

"The tremendous success of audio was the main driver of a decline in gross margin growth. Audio [compared to] the mix of all our products commands a lower profit," he said.

De Luca also pointed the finger at disappointing sales for its wireless iPod headphone product launched last summer. Sales were hit by an unexpected alteration to the iPod format that meant the headphones needed an adapter to function.

"The product was launched amid great reviews. Without this setback gross margins would have been 32.5 per cent [instead of 32 per cent]," De Luca said.

The company said it introduced more than 130 new products in the 2006 fiscal year, and shipped a record 143 million units.

Looking ahead, Logitech said it expected sales and operating income to grow 15 per cent annually. The company will continue its share buyback programme after spending $241 million acquiring six million shares last year.

Logitech started life in 1981 in canton Vaud in western Switzerland producing computer mice for large PC manufacturers.

swissinfo with agencies

In brief

Logitech is a Swiss public company traded on the Swiss stock exchange and in the United States on the Nasdaq National Market System.

Its corporate headquarters are in Fremont, California. Its office in Switzerland oversees its operations in Europe, the Middle East and Africa.

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Key facts

Logitech 2005/6 results:
Net profit: $181 million (2004/5 $149 million)
Sales: $1.8 billion ($1.48 billion)
Gross margin: 32% (34%)
Q4 sales $466 million (Q4 2004/5 $403 million)
Q4 net profit: $51 million ($40.2 million)
Q4 gross margin: 31.9% (33.6%)

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