Logitech International S.A. - Registered Shares (MM) (NASDAQ:LOGI)
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5 Years : From Jul 2012 to Jul 2017
Logitech International SA (LOGN.VX) expects the second wave of hardware that it is supplying for Google's TV (GOOG) application to become the real moneymakers.
Its first range of products, including the Revue set-top box, has already been launched in the U.S. and is due to go on sale in the rest of the world next year.
Logitech makes the Revue set-top box, high definition TV webcam and mini controller, used in Google TV, which allows people to access the Internet and search for shows and films through their TVs.
Logitech on Thursday raised its full-year sales guidance by $50 million, saying it expects to generate up to $2.4 billion, mainly to take into account contributions from the Google TV hardware.
It sees the products as long-term plays, saying it was ready to accept lower than its usual profit margins to build a market for other peripherals it will launch next year.
"We believe deeply in Google TV. We have been investing in it for several quarters without a dime of revenue," Gerald Quindlen, Logitech president and chief executive, told Dow Jones Newswires.
He said he anticipates lower gross margins for the first wave of products--the Revue set-top box, TV camera and mini control--than the 32%-34% range for the rest of the Logitech's computer products.
But Logitech is expecting margins to improve once additional peripherals are launched in the second half of 2012.
"Google TV has broad legs--it has potential for a lot of different products to be supplied by Logitech," he said.
"We will have a much broader range of peripherals over time. This is just the beginning. The first focus is to get customers familiar with Google TV," Quindlen said.
As well as building market presence, he wants to increase the number of sales channels in the coming months. At present the Revue set-top box is sold through Amazon.com Inc. (AMZN), Best Buy Co. (BBY) and Logitech's own website.
The gross profit from Google TV would be used for marketing activity to create awareness, with the aim of generating long term growth.
"This is about driving demand, creating awareness. We really need to get a viral effect. This is a new application for the consumer, a new paradigm which has to be talked through," he said.
"There are a number of other offers in the market, but they are primarily streaming devices that allow you to stream movies and TV. Google TV is a platform which allows the full web, and allows brand-new activities like video calling from the living room," he said.
Google has also given out 10,000 systems to developers so they can create new applications, he added.
"These people are working on applications to enrich the platform for the biggest screen in the house," Quindlen said.
Company Web Site: http://www.logitech.com
-By John Revill, Dow Jones Newswires; +41 43 443 8042 ; firstname.lastname@example.org