Logitech is a well-known provider of computer peripherals, including keyboards, mice, and webcams. Recently, they released their preliminary financial results for the holiday quarter, which reflected the broader PC market, and the news was not good. Net sales were down 22-23%, and operating profit was down 33-35%. In response to this, Logitech has cut their annual forecast, predicting negative sales growth of 15 to 13 percent. This news caused Logitech’s share price to drop by 20%. The global PC market has also taken a hit, with shipments declining 28.1% in the holiday quarter. However, there is hope for the future, as IDC expects some segments of the desktop computer market to start recovering by the end of the year. This news has left many investors wondering what the future holds for Logitech.
In short: Logitech shared preliminary financial results for the holiday quarter that more or less mirrored the broader PC market, and that’s not good news for investors. For the quarter ended December 31, 2022, Logitech reported preliminary net sales of $1.26 billion to $1.27 billion. This is 22-23% less in US dollars compared to the same period of the previous year.
Operating profit ranged from $171 million to $176 million, down 33-35% from the $263 million earned in the same quarter a year ago.
Logitech CEO Bracken Darrell said they were disappointed with the preliminary results, adding that they reflected challenging macroeconomic conditions, including slowing sales to enterprise customers. Based on these softer numbers and continued uncertainty in the supply chain due to the ongoing Covid outbreak in China, the peripheral maker is cutting its annual forecast.
Logitech’s forecast for fiscal 2023 included $650 million to $750 million in non-GAAP operating profit and negative eight percent to negative four percent sales growth. The revised forecast now ranges from $500 million to $600 million, as well as negative sales growth of 15 to 13 percent.
The Swiss a peripheral device maker was one of several businesses to benefit from the pandemic. As companies switched to work-from-home models to stay afloat during the lockdown, sales of PCs and related accessories like keyboards and mice skyrocketed. With the pandemic almost over, demand for computers and accessories has dropped significantly.
On this news, Logitech shares fell about 20 percent.
Earlier this week, IDC reported that global shipments of traditional PCs fell 28.1% during the holiday quarter compared to the same three-month period in 2021. In fact, this decline is comparable to the fourth quarter of 2018, when Intel was struggling with processor stock.
IDC expects some segments of the desktop computer the market to begin to recover by the end of this year, with broader growth to follow in 2024.
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