Re-focus on Mobile Accessories Causes Layoffs at Logitech

By Joe Rizzo March 01, 2013

In January of this year, Logitech announced what can be considered disappointing earnings for its third quarter 2013 fiscal year. Sales were down by 14 percent with a reported net loss of $195 million. That is when Logitech’s CEO, Bracken Darrell made an important decision. He decided that it was time to focus on making some serious changes to Logitech’s business.

Bracken P. Darrell became Logitech’s CEO on January 1, 2013. He took over for Guerrino De Luca, who now serves as Logitech’s chairman of the board.

The first step that Darrell took was to sell off the Harmony remote business. The second step was to redirect Logitech’s focus toward mobile devices. Darrell said, “The PC market has changed dramatically in the last two years and in my assessment we haven't evolved as quickly as we need to. With that in mind I am now focused on transitioning Logitech to become a faster and more profitable company."

Darrell also said that he would be looking at all areas of Logitech’s business. If things do not improve on the PC side, he said that the company will decisively scale back spending in that area. That was what happened with the Harmony remote business. Sales were down by 24 percent with units declining by 55 percent.

Darrell said that given these figures, the company "does not have the luxury of waiting a few more quarters to see its sales improve. We simply can no longer justify the ongoing investment in this category given the current state of our business and the dynamics of that niche market."

That brings us to today. On March 1, 2013, Darrell announced that Logitech would be laying off 140 people. That is about five percent of its non-direct workforce. Darrell announced an organizational alignment that would closely focus on new strategic priorities. Darrell said, “This alignment to the strategic priorities will save Logitech approximately $16 to $18 million in operating expenses this year alone, but requires a workforce reduction, so you know, ‘layoffs’.”

Logitech was built around support for the PC. Keyboards, mice, trackballs and the QuickCam PC video camera were paramount for Logitech. I myself have had a Logitech wireless keyboard and mouse for as long as they have been making them. However, these are clunky items for the “on the go” generation, so it could be said that the PC is dying. Like a shark constantly moving to stay alive, Logitech is smart enough to re-focus its attention and shift more resources toward the mobile market.

Darrell is quoted as saying, “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.”

Due to the slow-moving performance that has been seen on the PC products side, Logitech has turned to working on projects such as the Ultrathin Keyboard Cover for iPad.

Logitech will not stop developing and making PC products, but it will spend more time looking at mobile devices and what products it can produce to make all of your mobile devices more comfortable and easier to use.

Edited by Brooke Neuman

TechZone360 Contributing Writer

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