The king of mice is scampering out of Canada.
“Yes, Logitech is preparing to close our Mississauga site at the end of September,” said Logitech spokeswoman Nancy Morrison in an email confirming the closure to ITBusiness.ca.
The number of layoffs “has not been determined yet,” Morrison wrote, but she said some jobs will be relocated elsewhere.
“Our sales and marketing staff will remain in a smaller location. The rest of the employees in Mississauga are part of our Digital Home team, which works across multiple sites in North America and Asia. Some of them will be relocated to other sites. To manage the complexity of this R&D effort, we are consolidating into fewer sites,” Morrison said.
“Those who will be relocated will be moving to our Silicon Valley site in Fremont, Calif. or in limited cases to Chennai, India,” she added.
About 100 people currently work at the Mississauga site, Morrison said.
It’s been a rough ride lately for Logitech, a Swiss firm now headquartered in Fremont which burrowed its way to peripheral hardware domination on the back of the ubiquitous computer mouse.
The company’s stock closed at a new 52-week low of $9.62 on the Nasdaq on Monday, the lowest dip in a slide touched off when Logitech posted a fourth-quarter profit of just $2.78 million in April, sharply missing analyst estimates and well below a Q4 profit of $24.49 million a year earlier.
“Part of it is market perception. This is a company where the majority of product lines are related to PCs and right now PC sales for the last nine months have gotten worse and worse across the industry,” says Tavis McCourt, a senior equity analyst who follows Logitech for Morgan Keegan & Co., an investment banking and brokerage firm in Memphis, Tennessee.
The outlook for PC and PC peripheral sales will stay flat or slightly down because the economy is now hurting globally versus just in the U.S., and also because of a delayed recession in netbooks and consumer laptops which never really happened over the past few years and is finally occurring now, McCourt said.
“The other impact is the iPad, where consumers are clearly thinking about replacing their laptops with tablets, which are generally cheaper,” he said.
Logitech’s current weakness is also due to the fact that “over 50 per cent of their sales come out of Europe but Europe’s not in a good space right now,” McCourt said.
Although Logitech is still the “number one player” in mice, keyboards, webcams, PC speakers and universal remote controls, it’s made two strategic missteps in the past year, McCourt said.
“They’ve been late to market with peripherals for tablets,” he said. “The other was they made a pretty big bet on Google TV, which up until now has been a disappointment.”
The Logitech Revue, launched last fall, is a set-top box that allows Google TV platform users to control their home entertainment centre through their smartphone.
Last week Universal Electronics filed a suit against Logitech over the Logitech Revue and Harmony remote control devices, alleging they infringe on 17 of Universal’s patents. Logitech said it disputed the merits of the suit and would challenge it in court.
A few days earlier, a class action suit was filed against Logitech in New York state on behalf of investors who bought Logitech shares between Oct. 28, 2010 and April 1, 2011, just before the company’s surprise Q4 earnings miss. That suit alleges Logitech failed to fully disclose “material adverse facts about the company’s true financial condition” to investors.
In 2008 Logitech heralded the shipment of its one billionth computer mouse since the company was founded in 1981. Logitech now makes a long list of other consumer devices including gaming hardware for Sony PlayStation and Microsoft Xbox, PC speakers, headphones, headsets, desktop microphones, universal remote controls, security cameras and iPod speaker docks.