Logitech 2006 Annual Report Download - page 67

Download and view the complete annual report

Please find page 67 of the 2006 Logitech annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 162

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162

Audio. Competitors in audio devices vary by product line. In the PC, mobile entertainment and
communication platform speaker business, competitors include Altec Lansing, Creative Labs and Bose
Corporation. In the PC and console headset, telephony and microphone business, our main competitors include
Plantronics and its Altec Lansing subsidiary.
Advanced Remote Controls. With our acquisition of Intrigue Technologies in May 2004, we expanded our
product portfolio to include a new line of personal peripheral devices for home entertainment systems. We have
greatly expanded our market share in this business recently. With many companies offering universal remote
controls, our success will likely attract more competition. Our competitors include, among others, Philips,
Universal Remote, Universal Electronics, RCA and Sony.
If we do not continue to distinguish our products, particularly our retail products, through distinctive,
technologically advanced features, design, and services, as well as continue to build and strengthen our brand
recognition and our access to distribution channels, our business could be harmed. If we do not compete
effectively, demand for our products could decline, our gross margins could decrease, we could lose market
share, and our revenues could decline.
If we do not continue to improve our product demand forecasting our business and operating results
could be adversely affected.
We use our forecasts of demand for our products to make decisions regarding investments of our resources
and production levels of our products. Although we receive forecasts from many of our customers, they are not
always obligated to purchase the forecasted demand. Also, actual sales volumes for individual products in our
retail distribution channel can be volatile due to changes in consumer preferences and other reasons. In addition,
our retail products have short product life cycles, so a failure to accurately predict high demand for a product can
result in lost sales that we may not recover in subsequent periods, or higher product costs if we meet demand by
paying higher costs for materials, production and delivery. We could also frustrate our customers and lose shelf
space. Our failure to predict low demand for a product can result in excess inventory, lower cash flows and lower
margins if we are required to reduce product prices in order to reduce inventories.
We have rapidly and significantly expanded the number and types of products we sell, and the geographic
markets in which we sell them, and we will endeavor to further expand our product portfolio and sales reach. The
growth of our product portfolio and our sales markets has increased the difficulty of accurately forecasting
product demand.
We have experienced large differences between our forecasts and actual demand for our products and expect
differences to arise in the future. If we do not continue to improve the accuracy of our forecasts our business and
operating results could be adversely affected.
Our business depends in part on access to third party platforms or technologies, and if the access is
withdrawn, denied, or is not available on terms acceptable to us, or if the platforms or technologies change
without notice to us, our business and operating results could be adversely affected.
In recent years we have expanded our product portfolio to include products designed for use with third party
platforms such as the Apple iPod, Microsoft Xbox™, Sony Playstation, and the Sony PSP. The growth of our
business is in part due to sales of these products. However, our business in these categories relies on our access to
the platforms of third parties, which can be withdrawn, denied or not be available on terms acceptable to us. For
example, to date Microsoft has not licensed us, or any other manufacturer, to produce third party wireless
peripherals for use with their new Xbox 360™ gaming console.
Our access to third party platforms may require our paying a royalty, which lowers our product margins, or
may otherwise be on terms that are not acceptable to us. In addition, the third party platforms or technologies
9
CG
LISA