Philadelphia: Logitech, the world’s largest computer mouse maker, on Monday posted a worse-than-expected 70% drop in third-quarter net income due to weak demand from customers amid the global financial crisis.
Net income was $40 million, or 22 cents per share, compared with net income of $134 million, or 71 cents per share, a year ago. Analysts had expected the company to earn $76 million, based on a Reuters poll of 12 analysts.
Sales for the third quarter totaled $627 million, a 16% decline from the year-ago quarter.
Retail sales in the Americas fell 21%, while sales in Europe, the Middle East and Africa (EMEA) dropped 19%. Sales in Asia rose by 8%.
“The deepening global recession had a significant impact on our operating performance as our customers continued to reduce inventory levels in the face of weaker consumer demand,” said Logitech chief executive Gerald Quindlen.
The company said it expects the retail market to be even weaker in the coming months. In the fourth-quarter, it expects the year-over-year declines in sales, operating income before restructuring charges and gross margins will be similar to or worse than the declines seen in the third quarter.
Still, the company expects to continue to generate positive cash flow from operations.
The company also said it started a restructuring plan that will reduce its workforce by about 550 to 600 jobs. The plan is expected to generate annual cost savings beginning in fiscal year 2010 of about $50 million.
The company said it expects to incur a restructuring charge of about $20 million to 24 million over the next twelve months.