Logitech to cut 140 positions in shift to mobile products
Logitech (Nasdaq: LOGI) plans to cut staff by 140 positions in an effort to reduce annual costs by $16 million to $18 million and refocus from PC accessories to mobile products, the company announced Friday.
The layoffs, around 5 percent of the firm's non-direct-labor workforce, are part of a realignment by Logitech's new President and CEO, Bracken Darrell, who took over the helm at the computer peripherals firm from Guerrino De Luca in January.
Wall Street was not sure how to react to the announcement. Logitech's stock price initially jumped in early morning trading Friday, from $6.78 to $6.84, then dropped to $6.77 and finally closing at $6.80.
"As we align the organization with our strategy to become a faster, more profitable company, we have also created opportunities to become more focused, improve operational effectiveness and even deliver additional cost savings that will contribute to improved profitability. These actions support our goals to develop outstanding mobility- and PC-related products, streamline our cost structure and achieve faster times to market," Darrell said.
Logitech expects a pre-tax cash charge of between $12 million and $14 million in the fourth quarter of its fiscal 2013 year related to severance and termination benefits, according to its 8-K filing with the Securities and Exchange Commission.
The firm said that the number and timing of the layoffs could vary depending on its "ability to implement the workforce reductions in various geographies; possible changes in the size or timing of the workforce reduction or the expected related costs and charges; and risks associated with Logitech's ability to achieve planned expense reductions and improved performance, efficiencies and profitability."
In its most recent quarter, Logitech reported a net loss of $195 million on $615 million in revenues, a 14 percent year-over-year decline. The net loss was due to a $211 million accounting charge related to its video conferencing reporting unit, which includes its LifeSize unit.
The computer peripherals firm is responding to changes in the market, in which IT spending on smartphones surpassed PCs for the first time, according to 2012 stats from IDC. As part of that effort, Logitech released in February the iPad Mini version of its iPad ultrathin keyboard cover.