Struggling Logitech May Unload LifeSize Video Unit


The CEO of troubled peripherals maker Logitech says the company might sell its LifeSize Communications unit as a way to help Logitech turn itself around.

During Logitech's third-quarter earnings call this week, Logitech CEO Bracken Darrell said the company will determine whether to sell LifeSize within the next three months.

"I'm taking a hard look at whether we are the best owners of LifeSize given the evolving dynamics of the videoconferencing space as well as the other challenges we face in improving Logitech's performance," Darrell said during the call. "There are a number of considerations in charting our go-forward strategy with LifeSize. And, I plan to update you on our thinking within the next 90 days."

[Related: Logitech Debuts Peripherals For Cisco Jabber Environment]

Along with the statement of its earnings report, Logitech said it will take a non-cash, non-tax-deductible goodwill impairment charge of about $211 million related to its videoconferencing unit, the majority of which is the LifeSize business it bought in 2009, but it also includes its Sightspeed, Paradial and Mirial assets.

"The enterprise video conferencing industry has experienced a slowdown in recent quarters, and consequently, through this period, the video conferencing reporting unit has not sustained the growth Logitech originally anticipated," Logitech said in a statement.

Logitech reported $615 million in sales for its third quarter, a 14 percent decline year-over-year and a net loss of $195 million, compared to $55 million in profit a year ago. It also blamed the global PC slowdown for its shortfall.

Darrell told investors that Logitech also plans to sell off its Harmony line of remote control and digital video products and discontinue some of its speaker docking and console gaming accessories.

Darrell, a former Whirpool executive vice president, officially became CEO of Logitech this month. He was named president back in March 2012 following the summer 2011 ouster of former CEO Gerald Quindlen and the installment of company chairman Guerrino De Luca as acting CEO. Darrell's planned succession of De Luca was confirmed at that time.

Darrell said during the third-quarter earnings call that Logitech is "on track" to remove $80 million in expenses for its fiscal 2014, part of the plan it first announced in April 2012.

LifeSize itself, which Logitech bought for $405 million in 2009, has also been through significant management changes. Colin Buechler became CEO of the unit in January 2012, succeeding co-founder Craig Malloy.

At the time, LifeSize appeared headed for a breakout year behind several major product launches and increasing sales. But, in Logitech's fiscal third-quarter 2013, LifeSize sales decreased 4 percent year-over-year.

LifeSize representatives did not respond to a CRN request for additional comment.

Global sluggishness in the overall videoconferencing market has dogged LifeSize's bigger competitors, too. Cisco's collaboration unit, which houses its video lines, declined 8 percent during Cisco's fiscal first quarter, reported in November, and prompted a management change. And, Polycom earlier this week reported $353 million in revenue for its fiscal fourth quarter, down 9 percent year-over-year, though up 5 percent sequentially.

Meanwhile, smaller video rival Vidyo, which is looking to disrupt the incumbent video players with its software-only approach, said this week that its growth in the context of Cisco, Polycom and LifeSize's challenges is proof its model is taking hold.

PUBLISHED JAN. 24, 2013