Logitech Reports Weak Sales

Logitech LOGI announced Monday that it has withdrawn its previous sales and operating income targets for fiscal 2009. We are maintaining our fair value estimate, however, as we had already lowered our fair value estimate last fall amid concerns about slowing consumer spending. The company also announced that it is cutting about 15% of its salaried workforce in an effort to reduce operating costs. We believe the lower costs and approximately $500 million cash and no debt will enable the company to weather the current economic turmoil. We will await additional insights from Logitech in its third-quarter conference call Jan. 20 to determine whether more caution is warranted on the stock.