Strong Demand for Harmony Remotes Gives Logitech Q1 Boost
The Harmony remote category was the “fastest growing retail product category” for peripheral maker Logitech in Q1 ended June 30, CEO Gerald Quindlen said in an earnings call. The company reported improved revenue and swung to a $20 million profit, 11 cents per share, from a $37 million loss, 21 cents, in Q1 last year. Total revenue increased 47 percent to $479 million.
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Harmony remote revenue soared 732 percent from Q1 last year and unit sales grew 256 percent in the category, Logitech said. The Harmony One was the best-selling SKU, followed by the Harmony 300, its cheapest remote to date at $49, Chief Financial Officer Erik Bardman said.
The pointing device category was the No. 2 retail product category for Logitech in Q1, led by “strong demand” for cordless mice, Quindlen said. Total pointing device revenue grew 46 percent in Q1 from Q1 last year and unit sales grew 60 percent. Cordless mouse revenue grew 57 percent, with unit sales up 91 percent. Corded mouse revenue increased a more modest 15 percent, with unit sales up 36 percent. Video revenue grew 10 percent, with units up 41 percent, while audio revenue increased 33 percent, with units up 17 percent. Revenue in the keyboards/desktop category grew 31 percent, with unit sales up 26 percent.
OEM was another strong performer, with revenue up 38 percent and units up 35 percent. It was the first time that Logitech saw “double-digit growth” in OEM in seven quarters, Bardman said. The growth was driven by OEM mice, up 22 percent in revenue and 27 percent in units, he said. Microphones for console system music games also contributed, but he didn’t elaborate.
Retail gaming, however, was the one blemish to Logitech’s results, with overall revenue down 15 percent and unit sales down 16 percent. Console game peripheral revenue fell 17 percent and units 26 percent, while PC game peripheral revenue fell 19 percent and units 11 percent. Logitech is “not actively out there pursuing” OEM game peripheral business, Quindlen said.
"The real opportunity for gaming” for Logitech will continue to be around the PC, but even more so, on a “long-term” basis, “I think the emerging gaming opportunity with Google TV,” Quindlen said. “We think there'll be a lot of interest in Flash-based games. There'll be a lot of opportunity for us for peripherals around that,” but not this fiscal year, he said. Logitech, along with Sony and Intel, said in May they will be bringing Google’s Android operating system to TVs this fall (CED May 21 p5). The first Logitech offering will be Logitech Revue, a set-top box with Harmony remote technology and a controller including keyboard and remote capabilities, Quindlen said Thursday. Logitech will also offer an HD camera and video chat for Google TV, along with applications “including one to turn a smartphone into an advanced controller for Google TV and home entertainment systems,” he said. He added more details will be given soon on pricing and Logitech’s channel strategy. Quindlen said he expected other companies to field set-top boxes for Google TV and welcomed that because it'll help grow the new platform’s installed base. “We may not be in the box business in the future,” he said. Logitech hasn’t determined what category it will include its Google TV results under, Bardman said.
Quindlen was “extremely pleased with our strong start” to fiscal 2011, he said. Its results were stronger than it had projected as the company saw “strong double-digit growth in all retail regions, led by the Americas” and OEM, he said. Logitech saw “continued improvement in sellthrough” of products, especially in the Europe, Middle East, Africa (EMEA) region, but the Americas and Asia Pacific topped expectations, he said. Sales of Logitech products priced more than $100 accounted for 15 percent of the company’s total Q1 retail sales, up from 12 percent in Q1 last year, Bardman said.
"Consumer confidence is still relatively fragile” in the Americas and EMEA, Quindlen said. But he said Logitech was seeing “largely positive” signs in its business overall, especially in emerging markets, where “we are now seeing steady broad-based rebounds … as consumer demand returns and access to credit has begun to ease.” Logitech was “increasingly optimistic” about fiscal 2011 results, Quindlen said. As a result, the company boosted its sales forecast for the year from about $2.3 billion to $2.3 billion-$2.35 billion, he said.