Reuters reported that Logitech shares were down 10% at 6:24 a.m. ET (10:24 UTC) Wednesday, as analysts weighed a lower gross-margin outlook against a second-quarter earnings beat. Reuters estimated the move had cut about 1.5 billion Swiss francs ($1.81 billion) from the company’s market value at that time.
Logitech’s preliminary, unaudited results for the quarter ended Sept. 30 showed net sales of $1.219 billion, up 3% in U.S. dollars and 2% in constant currency from a year earlier. GAAP operating income was $201 million, while non-GAAP operating income reached $231 million. Non-GAAP diluted earnings per share were $1.51. Reuters reported that non-GAAP operating income exceeded Visible Alpha’s $204 million consensus estimate; it also topped Logitech’s guidance range of $185 million to $210 million.
For the December quarter, Logitech forecast a gross-margin rate of 41% to 42%, about 200 basis points below the year-earlier level. Chief Financial Officer Matteo Anversa said freight, logistics and material costs, particularly components, would account for roughly 150 basis points of the expected decline. Higher promotional spending would contribute about 50 basis points.
Reuters reported differing analyst views on the share decline. Vontobel analyst Michael Foeth cited the margin outlook and weaker consumer demand in Europe, while Kepler Cheuvreux analyst Torsten Sauer pointed to profit-taking.
Logitech said an incident at a semiconductor supplier forced the supplier’s facility to close at the end of June. It resumed operations in September and was scaling output, though it still could not meet Logitech’s needs. The company forecast third-quarter sales of $1.36 billion to $1.43 billion and non-GAAP operating income of $220 million to $255 million. It estimated the disruption could reduce third-quarter sales by $70 million to $80 million, with the impact largely resolved by the fourth quarter. Logitech expects the facility to reach full production by year-end.
