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Logitech shares fall as investors pocket recent gains

FILE PHOTO: Chief Financial Officer, Vincent Pilette, of the computer peripherals maker Logitech addresses a news conference in Zurich, Switzerland March 6, 2019. REUTERS/Arnd Wiegmann

By John Revill

(Reuters) - Logitech International SA shares fell nearly 9 percent on Tuesday as investors cashed in on the computer peripheral maker's gains this year and success providing fast keyboards and mice for players of online games like Fortnite.

Traders said the sell-off followed Logitech shares' gaining 40 percent since the start of the year, rather than the latest earnings and sales which were roughly in line with forecasts.

The Swiss-U.S. company, which also makes mobile speakers and video conferencing equipment, reported a 22 percent increase in fourth-quarter profit to $42.1 million. Revenue increased 5.4 percent to $624.3 million, matching analyst estimates.

The surprise departure of Chief Financial Officer Vincent Pilette "to pursue a senior management role at another company" and Logitech's not upgrading its guidance for its next financial year could also have played a role, traders said.

"The figures are fundamentally OK, but Logitech's shares have risen very strongly this year, so there is now some consolidation," one Zurich-based trader said.

Pilette's departure, after six years at Logitech, could also be a contributory factor, the trader said.

"The CFO leaving is a secondary reason, although everyone is replaceable these days," he said.

At 0830 GMT Logitech shares were down 3.7 percent to 40.81 Swiss francs. The stock started 2019 at 30.92 francs.

For the year as a whole, Logitech sales increased 10 percent, when currency swings were removed, to $2.79 billion.

"We've delivered our third consecutive year of double-digit growth in constant currency and our highest fiscal year sales ever," said Chief Executive Bracken Darrell, who has led the turnaround of the company.

Darrell described Pilette, who was popular among the investment community and invested in Logitech before joining the company from Electronics For Imaging, as a "terrific partner".

Nate Olmstead, head of finance, will be interim chief financial officer when Pilette leaves at the end of May.

Logitech said it expected to increase its sales in the mid- to high single-digit range and increase its operating income to $375 million to $385 million during its 2020 financial year, confirming the outlook it gave in March.

During the 2019 business year, which ended on March 31, Logitech had twice increased its guidance.

Analysts described the figures as positive with strong profit margins.

"We regret Vincent Pilette's departure and it will be important that his successor pursues the same discipline in executing on the business model," said Michael Foeth at Bank Vontobel.


(Reporting John Revill in Zurich by Rishika Chatterjee in Bengaluru; Editing by Bill Rigby and Michael Shields)