October 31, 2011 at 12:21 PM EDT
Logitech Shares — 3 Pros, 3 Cons
The popularity of tablets -- and a corresponding drop in need for peripherals -- could cut deeply into Logietch's (LOGI) future.

Back in September, Logitech (NASDAQ:LOGI) cut its full-year guidance for the third time. The new estimate came to $2.4 billion, which was $100 million lower than the prior forecast. Operating income would be about $90 million, compared to the previous forecast of $143 million.

But Logitech CEO Guerrino De Luca said this would be the final change, and he even apologized to investors. However, it was not enough to bolster confidence — LOGI shares hit a low of $7.72 after sitting around almost $20 in March.

Yet by setting the bar fairly low, Logitech actually was able to show some relative strength in the fiscal second quarter. The company last week reported a 1% increase in revenues to $589 million and earnings of $17 million, down from $41 million.

It was enough to generate optimism with investors, with Logitech stock spiking 17.3% on the news. On Monday, the stock was trading near the $10 mark. So might things be getting better? More importantly, is LOGI stock worth buying? To see, let’s take a look at the pros and cons:

Pros

Leader in peripherals. Founded in 1981, Logitech was one of the first companies to realize the huge opportunity of the PC revolution. Logitech originally developed staples like traditional keyboards and mice, but it has since expanded into other categories like gaming, wireless devices (including keyboards and mice) and home entertainment.

China story. This has been a bright spot for Logitech. The company has made substantial investments in the country, and on the earnings conference call, De Luca indicated Chinese growth should remain fairly strong in the coming quarters.

LifeSize. This product line provides for HD video used in conference calls and meetings. It compares favorably to more expensive offerings, such as from Cisco (NASDAQ:CSCO). In the latest quarter, the LifeSize segment posted a 19% growth rate.


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