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To: Johnny Canuck who wrote (39873)	7/10/2003 2:45:45 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 71912

Logitech shares plunge on profit warning By Reuters July 9, 2003, 9:44 AM PT Shares in Logitech lost a third of their value on Wednesday after the world's biggest maker of computer mice shocked investors with a profit warning just weeks after saying business was on track. The Swiss-American company best known for its wireless computer accessories said it now expects operating income in the quarter ended June 30 to be $7 million to $8 million, half its original forecast. Shares in the company fell 30 percent to $28.98 at the open of Wednesday trading on the Nasdaq. By midday, shares were trading at $30.37. Investors questioned the timing of the warning, just a day after an interview appeared in a Swiss newspaper with Logitech's chief executive in which he indicated that everything was on track. The CEO said the interview had been carried out late last month. "Nothing was said. That puts some doubts about their communication policy and confidence in the company and its forecasts," said Rudi Buxtorf, a fund manager with Coutts Bank Switzerland who holds Logitech shares. Logitech CEO Guerrino De Luca said that stiffer competition and a slower market in its retail business in the quarter prompted the company to advertise more aggressively and cut prices, which weighed on margins. The company said revenue would be in line with expectations at $218 million. De Luca told a conference call the company had not been aware of the full extent of the margin impact until it closed its books. "We had anticipated slightly higher sales than the ones we reported. But the combination of the two disappointments made the surprise very late in the game," he said. Zuercher Kantonalbank analyst Serge Rotzer said it would take time for Logitech to repair the damage to investor confidence. Despite the profit warning, De Luca stuck to Logitech's original target of $1.21 billion in sales and an operating income of $142 million in the financial year to end-March 2004. But analysts doubt the company can meet these targets and are revising their estimates. "I question the guidance. To meet their full-year targets they have to reach exorbitant margins in the third and fourth quarter," said ZKB's Rotzer. Private bank Pictet & Cie said in a note it would cut its full-year estimates and put its recommendation under review, while bank Sarasin said the projected growth in operating income of 15 percent was too optimistic. Logitech will release its final first-quarter results July 22. [Harry: Some of this could be share loss, but I would guess it has more to do with a very weak end user demand. If this is so then I would expect HP, AMD, ATYT amd NVDA to experience similar margin pressures and lower sales.]