Logitech Pegging Its Future on Mobile Devices, Emerging Markets

Logitech, which four times has scaled back fiscal 2012 revenue projections, will “not experience the sales and revenue growth we experienced in the past” if it doesn’t successfully execute on growth opportunities, or if sales in mature markets are “lower than expected,” it said in its 10-Q filed Monday at the SEC. The company believes “sales of our PC peripherals in our mature markets will decline” in 2012 “and potentially beyond” due to “decelerating” demand for PCs in markets including North America, western and northern Europe, Japan, Australia, and New Zealand.

Logitech has historically targeted peripherals for the PC platform but now plans to focus more personnel and financial resources on product innovations and growth opportunities in emerging markets, in peripherals for mobile devices and its LifeSize video conferencing division. The investments “may not result in the growth we expect, or when we expect it, for a variety of reasons,” the company said.

Emerging markets including China, India, Russia and Brazil are expected to be future high growth markets for PC peripherals product lines, and the company is allocating “significant resources” to sales, marketing and administrative personnel in China and, to a lesser extent, other emerging markets, Logitech said. Growth opportunities will be offset by potential local competition, higher credit risks, and cultural differences that “affect consumer trends in ways which may be substantially different from our current major markets,” it said. Business and results of operations “could be significantly harmed” if the company doesn’t develop “innovative and reliable peripherals and enhancements in a cost-effective and timely manner” that appeal to customers in those markets, if consumer demand for PCs and peripherals in emerging markets doesn’t develop as expected or “if we invest resources in products or geographic areas which do not produce the growth or profitability we expect, or when we expect it,” Logitech said.

Mobile devices, including tablets and smartphones, are “rapidly changing the consumer PC market,” Logitech said, and are being sold at retail without peripherals. While this creates opportunities to sell peripherals to consumers “to help them be more productive and comfortable,” the company said, “consumer acceptance and demand for peripherals for use with tablets and other mobile computing devices is still uncertain.” Moreover, the increasing popularity of tablets and smartphones could lower demand for PC peripherals and impact Logitech’s peripherals sales. “If we do not successfully innovate and market products designed for tablets and smartphones, if our distributor customers do not choose to carry or market such peripherals, or if general consumer demand for peripherals for use with these devices does not increase, our business and results of operations could be significantly harmed,” it said.