Logitech, the world's largest maker of computer mice, posted a 15 percent drop in first-quarter profit on Thursday as competition pressured Webcam sales, pushing shares lower.
Net profit in the quarter, which finished at the end of June, fell to $25.6 million from $30.1 million in the year-ago period, below the average forecast of $29.7 million in a Reuters poll of 13 analysts.
The year-earlier quarter's results were boosted by an after-tax gain of $5.8 million from its sale of shares of Anoto Group AB.
By 1445 GMT, shares in the group, which have already lost some 3 percent so far this year, had fallen 1.76 percent to 33.55 Swiss francs, paring some of the day's losses.
We view today's results and expected stock market reaction as a buying opportunity given Logitech's strong product line-up, said Kepler analyst Roger Steiner.
The group said the first quarter was hit by a steep decline in Webcam sales in, particularly in the Europe, Middle East and Africa (EMEA) region.
Logitech missed its sales target in its last fiscal year after Microsoft entered the Webcam market.
The group, which posted double-digit sales growth at most of its units, said sales at the group's video unit declined by 38 percent versus the year-ago period, with EMEA recording a 62 percent decline.
But the group expects a return to double-digit growth by the fourth quarter.
We believe the worst is behind us, Chief Executive Guerrino De Luca said in a conference call. The group will focus on launching new products, partnerships and more marketing in shops to boost Webcam sales in Europe.
Logitech has a market share of between 45 percent and 60 percent in the Webcam category and Microsoft's market share is between 15 percent and 20 percent, Logitech said.
Logitech said it now expects its share of the market to remain stable.
Operating profit rose 1 percent to $24 million on sales up 9 percent at $430 million, making this quarter the first of single-digit sales growth after 34 consecutive quarters of double-digit sales growth.
Logitech confirmed its target of 15 percent growth in sales and operating income for the 2008 financial year.
The first quarter is traditionally the weakest quarter for Logitech and investors are awaiting the roll out of new products ahead of the Christmas season in its third quarter.
We expect new products in all major categories with a number of innovative items like the MX Air mouse that was announced a few days ago, said Vontobel analyst Michael Foeth.
With increasing news flow we also expect momentum to return into the share price.
Future growth opportunities could come from the area of wireless networks at home, Chief Financial Officer Mark Hawkins told Reuters in an interview.