Logitech Re-Evaluating LifeSize

Following recent troubles at Logitech, the CEO of the company has announced that it is reevaluating ownership of its LifeSize Communications unit.

According to Logitech's CEO Bracken Darrell, formerly Whirlpool's executive vice president, the firm is considering multiple options regarding LifeSize, including selling the unit, over the next three months.

Darrell said: "I'm taking a hard look at whether we are the best owners of LifeSize given the evolving dynamics of the videoconferencing space as well as the other challenges we face in improving Logitech's performance. There are a number of considerations in charting our go-forward strategy with LifeSize. And, I plan to update you on our thinking within the next 90 days."

A non-cash, non-tax-deductible goodwill impairment charge of $211 million related to its videoconferencing unit will be taken by Logitech. The majority of this sum is the Lifesize business which was purchased in 2009, and Sightspeed, Paradial and Mirial are assets which will also be included.

In a statement, Logitech said: "The enterprise video conferencing industry has experienced a slowdown in recent quarters, and consequently, through this period, the video conferencing reporting unit has not sustained the growth Logitech originally anticipated."

$615 million in sales during the third quarter was also reported by Logitech; this is a 14 percent decline year-over-year and results in a total loss of $195 million. This contrasts greatly with a year ago when the company made $55 million in profit. The slowdown in global PC sales is also part of the shortfall.

Investors were told that Logitech will sell its Harmony line of remote control and digital video products, and will also stop selling some of its speaker docking and console gaming accessories.

Third-quarter earnings show, according to Darrell, that Logitech is "on track" to cut $80 million of its expense for its 2014 fiscal year; this is part of a larger plan which was first announced in 2012.

The CEO of Lifesize, Colin Buechler, stated that the company, which was acquired by Logitech for $405 million in 2009, has also made significant changes to its management.

During Logitech's fiscal third-quarter 2013, sales in Lifesize fell 4 percent year-over-year; this is contrary to predictions that the company was headed for a breakout year following increasing sales and other major product launches.

The videoconferencing market has been rather slow lately, and has caused problems for Lifesize's competitors as well. For example, it was reported in November that Cisco's collaboration unit which houses its video lines, fell 8 percent during that company's first quarter; this decline prompted a management change. Additionally, Polycom also reported a nine percent year-over-year fall (making $353 million in total revenue), but has gone up five percent sequentially.

Vidyo, a smaller video rival, has stated that its model (software-only approach) is strengthening, particularly as it has displayed growth in context of the problems faced by Cisco, Polycom and LifeSize. (CY) Link