Logitech kicked off the week by announcing it will release 15 percent of its total salaried workforce, with most of the 500 job cuts expected to be non-manufacturing jobs. Logitech has 9,000 employees worldwide, while only 3,500 are on salary, with offices in Silicon Valley, Europe, and Asia.
The weakness for Logitech's products -- with the company specializing in peripherals -- is across the world, and isn't especially high in a specific geographic area. Christmas sales of Logitech products were worse than expected by company officials, although specific sales numbers were not discussed.
In October, Logitech lowered its fiscal 2009 sales and profit forecasts, with economic growth the main reason behind the move. Although original estimates indicated 15 percent expansion in both sales and profits, the company later predicted sales would increase 6 to 8 percent and operating income would rise 3 to 5 percent for the fiscal year.
"We are therefore taking significant actions to align our cost structure with what is likely to be an extended downturn," Logitech CEO Gerald Quindlen said in a statement. The company hopes to make it through this economic crisis because it has "a strong cash position, no debt and we continue to maintain market share across multiple segments and geographies."
Because Logitech has a wide variety of lower-cost products when compared to average household income, the fact that the company is cutting jobs is not a good sign; financial analysts agree. Managers and product developers will lose their jobs, but manufacturing jobs could be cut at a later date.
Logitech has scheduled an earnings teleconference later this month, when company executives will further discuss the job restructuring and financial outlook change.
The struggling economy has forced Logitech, Sony, Philips Electronics, Sun Microsystems, Motorola, and other companies to reduce their workforces as consumers are reportedly beginning to buckle down on spending.
quote: weakness for Logitech's products
quote: "We are therefore taking significant actions to align our cost structure with what is likely to be an extended downturn," Logitech CEO Gerald Quindlen said in a statement