Accessories maker Logitech posts 70 percent loss, cuts 550 jobs

As the PC market continues to slide, it's carrying the peripherals market downhill, too, with major accessibility components maker Logitech reporting a 70% drop in net income for the quarter ending December 31.

In posting its dismal financial results, Logitech pointed to sales slumps in PC speakers and keyboards as well. It announced intentions to cut 550 to 600 salaried positions -- apparently the company's most extensive job cuts since the mid-1990s, when it moved production facilities from Asia to Ireland.

To try diversifying outside of its traditional peripherals, Logitech has bought out two other companies over the past six months.

Logitech initiated the $34 million acquisition of Ultimate Ears last summer, before the world financial crisis hit in September. The measure brought Logitech beyond the PC market, since Ultimate Ears focuses exclusively on small ear phones for portable devices such as cell phones and MP3 players.

But in the early November time frame, the vendor spent another $30 million to buy SightSpeed, a company which plays directly in the PC space. SightSpeed is a video messaging and video conferencing service chosen by Dell last year to provide the infrastructure for its new Video Chat service.

Like other vendors in the computer industry, Logitech is also being adversely impacted in the US market by the bankruptcy and liquidation of the Circuit City retail chain.

However, Logitech's sales were down during the most recent quarter in all regions of the world except for Asia, where revenues stepped up 8%.

Specifically, Logitech's net income for the third fiscal quarter ending December 31, 2008 fell to $40.5 million, or 22 cents a share, from $133.6 million, or 71 cents per share, for the same quarter the year before. Gross margin (the percentage of sales remaining after production costs) declined to 29.9% from 36.9%.

In connection with the planned job cuts, Logitech looks likely to incur a restructuring fee of as much as $24 million over the next 12 months.