羅技 (LOGI) 2012 Q4 法說會逐字稿

Good day and welcome to the Logitech fourth quarter financial results conference call.

At this time, all participants are in a listen-only mode.

We will be conducting a question-and-answer session, and instructions will follow at that time.

This call is being recorded for replay purposes and may not be reproduced in whole or in part without written authorization from Logitech.

I would like to introduce your host for today's call, Mr.

Joe Greenhalgh, Vice President of Investor Relations and Corporate Treasurer at Logitech.

Please proceed.

Welcome to the Logitech conference call to discuss the Company's results for the fourth quarter ended March 31st, 2012.

The press release, our prepared remarks, and slides, and a live Webcast of this call are available online at logitech.com.

As noted in our press release, we published our prepared remarks on our Website in advance of this call.

Those remarks are intended to serve in place of extended formal comments.

And we will not repeat them on this call.

During the course of this call, we may make forward-looking statements, including forward-looking statements with respect to future operating results that are being made under the safe harbor of the Securities Litigation Reform Act of 1995.

The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated in the statements.

Factors that could cause actual results to differ materially include those set forth in Logitech's Annual Report on Form 10-K dated May 27th, 2011, and subsequent filings, which are available online on the SEC EDGAR database, and on the final paragraphs of the press release and prepared remarks reporting fourth quarter results available at logitech.com.

The forward-looking statements made during this call represent management's outlook only as of today.

And the Company undertakes no obligation to update or revise any forward-looking statements as a result of new developments or otherwise.

This call is being recorded and will be available for replay on the Logitech Website.

Joining us today from Zurich are Guerrino De Luca, Chairman and Chief Executive Officer, and Bracken Darrell, President.

And here in Newark is Erik Bardman, Senior Vice President of Finance and Chief Financial Officer.

I'd now like to turn the call over to Guerrino.

Thank you, Joe.

Thanks, all of us, for joining us today.

I was pleased that we ended the year with results that were better than our outlook.

It has been quite some time since we've been able to say that.

Our results in Q4 were consistent with what we've seen through much of the year.

Mice and keyboards are holding steady.

Tablets, accessories are providing good incremental growth.

And we're building momentum in music.

Our product portfolio is not yet as strong as it needs to be.

And that's especially true in the remotes and consumer video category.

The good news is we will deliver a strong set of products that address the gaps across our whole portfolio in time for the holiday season.

I was very encouraged by the return to growth in both sales and profitability in EMEA in Q4, the region being the primary driver of the substantial year-over-year increase in the Company's gross margin.

One year ago at this time, we identified poor execution in EMEA as the major negative factor impacting our results.

It took us several quarters to get our business back to a healthy state.

It is now clear that the execution issues are behind us.

And our largest sales region is well positioned to deliver a much stronger fiscal '13.

Our Q4 performance in China brought a strong conclusion to a great year.

We started fiscal '12 with a goal of making China our third largest country for sales.

And we easily achieved that target with full-year sales growing by 58% compared to the prior year.

We built a strong team in China.

And I'm confident that we have the right strategy to drive continued growth.

This is the extent of my comments on the prior fiscal year.

As we look at Logitech's future, I'm very excited to be joined today by our new President Bracken Darrell.

Bracken has the right experience and the traits of a great leader, which he has already demonstrated in joining the Company earlier this month.

I'm pleased to turn the call over to him now.

I will return shortly with some comments on our fiscal '13 product portfolio, and then we'll open the call to your questions.

Thanks, Guerrino.

It is great to be here.

I want to spend a few minutes talking about why I'm thrilled to be here, my background, and my focus on simplifying the organization.

Logitech embodies where I want to be, at the crossroads of innovation, consumer insight, and design [magic].

I've spent my entire career in consumer products because I love this place where humanity meets technology, the psychology, and the science of great consumer products.

Logitech has a successful track record of providing outstanding consumer-branded technology products.

And it has a strategy I believe in.

I also believe my background and experience are well suited to help mobilize the organization to drive toward improved performance to take advantage of the growth opportunities before us.

I have extensive international experience working in global companies and spent the last eight years living outside the US.

I've reignited consumer-branded product companies with my role at Braun providing a very relevant experience.

When I joined Braun, it was an engineering-driven, design-led organization, very similar to Logitech.

I often leveraged those strengths and made them more consumer centric in their product decisions.

And the result was a stronger connection with the consumer that led to significantly improved financial performance.

I want to talk now about the importance of simplifying the Logitech organization.

I believe that Logitech size got ahead of its business over the last several years.

It's clear that -- clear to me that, to reignite growth, we need to be faster, simpler, and more consumer centric.

Some of this transformation has already begun with the management team's work to reinvigorate the product portfolio.

But, we also need to simplify the organization through restructuring.

With more approval, I've already eliminated a layer of business and sales executive management.

The leaders of our business groups and sales regions now as of today report directly to me.

These changes will enable me to work more closely with our product and sales teams.

Together, we can become more responsive to the changing needs of today's consumers as we address new opportunities with great speed and flexibility.

In addition, we're consolidating brand management and product portfolio management under the leadership of the business groups and streamlining most other functions.

I expect most of this restructuring to be completed by the end of the current quarter, freeing up resources to pursue our growth opportunities.

The planned restructuring should result in a reduction of approximately $80 million in annual operating costs.

We plan to update you before the end of this quarter, Q1, with the size of the restructuring charge, most of which we expect to be booked this quarter.

Before wrapping up my comments, I want to say how excited I am about the opportunity to help return Logitech to sustained profitable growth.

We're a company with a powerful combination of engineering talent and consumer insight.

And I believe the best is still to come.

I look forward to providing you with updates on our progress in the coming quarters.

Let me turn this call back over to Guerrino.

Thanks, Bracken.

Shortly after I returned to the CEO position in July 2011, we began to reemphasize the centrality of the product to Logitech's success, striving for the ultimate consumer experience in everything we do.

Consumers are more than happy to spend their money on great product.

But, their standards have changed over the last few years.

We're focused on meeting and exceeding the new standards of consumer expectations.

And I believe we made excellent progress towards this goal with our new fiscal '13 product portfolio.

Our product development efforts for fiscal '13 have targeted our most promising growth opportunities, including tablet, music, business product, emerging markets, Windows 8, and LifeSize.

As you know, the majority of our new product launches are still ahead of us.

But, I want to highlight a few recently announced examples, starting with tablets.

Just last week, we announced the Logitech Ultrathin Keyboard Cover.

Priced at $99 and very positively reviewed, it features a slim and sleek aluminum spleen cover that protects the iPad screens and a built-in keyboard that (inaudible).

It attaches securely to the iPad with a magnetic clip.

And its built-in stand holds the iPad at the best angle for typing or watching a movie.

But, these words don't describe the magic of this product.

You should absolutely try it.

Moving to music, at the beginning of April, we started shipping the Logitech UE Air Speaker.

Our flagship speaker features air play for wireless streaming from iTunes, iPhone, iPad, or iPod Touch.

The stylish modern design and the easiest setup of any air play speaker in the market, it delivers high-quality uncompressed audio in any room of the house over your Wi-Fi network.

I mentioned the opportunity before, the opportunity for Logitech for business.

Last month, we introduced a new product category for unified communications, the all-in-one audio and video ConferenceCam.

The Logitech BCC950 ConferenceCam is the first communication tool to combine a full HD Webcam with a high-quality omnidirectional full duplex speaker phone in one USB device.

The ConferenceCam is optimized for Microsoft Link and is Skype certified.

With its $299 price, it's ideal for meetings of one to four or more people, whether in conference room or individual offices.

We believe that the major navigational enhancement in Windows 8 due to ship in October will provide a significant opportunity for [IPC] peripherals.

And we will be ready with innovative, compelling products when the new platform is launched.

In the meantime, you can get a flavor and a preview of where we're heading with the Logitech Touch Mouse M600, was launched in Q4 and made a significant contribution to our mice sales during the quarter.

Our latest wireless mouse is priced at $69 and features a touch surface.

It makes it easy to scroll, swipe, and surf wherever your fingers rest on the mouse.

Clearly, there is much more to come in this space.

There are many more innovative products in our fiscal '13 roadmap, and we look forward to telling you about them in the months to come.

By the time we have arrived at the holiday selling season, we expect to provide consumers with our best portfolio in years with clearer assortments and more compelling upsell propositions across all of our categories.

I could not be more excited with what I see in our product pipeline.

And I can't wait to introduce these great new products to consumers.

We exited fiscal '12 with a better performance than what we expected.

But, obviously, we're far from where we need to be financially.

With key initiatives in place to strengthen our product offerings, reduce cost, and simplify our organization around processes, we believe we are taking decisive steps to position Logitech to deliver improving financial resource beginning in the second half of the current fiscal year.

We understand the challenges before us.

We see significant market opportunities for growth.

And we're taking action to aggressively pursue these opportunities.

We know what needs to be done to return Logitech to the path of sustainable, profitable growth.

And I believe we're on the right course.

We look forward to keeping you abreast of our progress.

And in the meantime, Bracken, Erik, and I are available to take your questions.

Please follow the instructions of the operator.

(Operator Instructions).

And your first question comes from the line of Zahid Hussein with Citigroup.

Please proceed.

Hi.

Thanks very much.

Couple of questions really.

I mean, you've given us some interesting thoughts around OpEx savings and COGS savings.

I was just wondering if you can give us any color at all over how we should think about that.

Is it 50-50 between COGS and SG&A or R&D, or is it more skewed towards the COGS side?

And really, secondly, on LifeSize, if indeed we're seeing a slowdown in Americas and similar to what some of our competitors are saying, I would've thought you'd be looking to actually increase investment potentially in sales [turn up], potentially new product, to try and get more scarce growth.

So, have you baked that into your OpEx guidance or your sort of sales -- your sort of operating cost savings as well?

Thanks very much.

Yes.

This is Erik Bardman.

Let me take the first part of your question there about OpEx and COGS and the restructuring.

So, at this stage, as we talked about and Guerrino and Bracken emphasized, we're very committed to taking the $80 million out of our annual cost base.

But, it's really -- starting as of today, we're going to be doing the detailed analysis work to figure out -- when you look at the levers of our cost base, what's that mix going to be?

So, for example, how much will come from personnel actions, changes we'll make in the marketing area, engineering projects, or to your point, things that we feel that we can do to reduce our cost of goods sold over time?

So, right now, I'd say stay tuned.

We've got the detailed analysis that we're going to be doing.

And our current plan is that we feel comfortable to complete that work before the end of the quarter and then can come back to you with an update of what that mix looks like.

Let me take the LifeSize side of your question.

Yes, you're right.

LifeSize declined in the last quarter.

Second half was not very good.

Yes, I've heard other competitors complaining.

There's some market weaknesses.

But, that's not where LifeSize is.

LifeSize is in a different position.

In a way, it ironically is almost in a symmetrical position to where Logitech is.

Logitech desperately needs new great products.

And it will get it.

LifeSize over the last 12 months has dramatically broadened this portfolio, and rightly so.

From a room system with marginal infrastructure offering, we have now virtualized infrastructure products, Cloud services, a very broad offering for our customers.

So, the product teams delivered.

[Absence] is that the translation of this broader and very differentiated offering into specific customer solutions, it's just taking time.

The sales force needs to understand and learn how to apply this broad offering to individual customers.

And that's a classic growth pain that we're facing in LifeSize.

I think it's temporary.

We understand how to fix it.

Does it need more investment?

No, it doesn't.

It increase -- we will continue to bet on the growth of LifeSize, but no, we're not expecting anything extraordinary to happen there.

I think that the team, [Colin] and the team know exactly what needs to be done.

And I am very confident that they will continue to be one of the growth driver of Logitech moving forward.

Okay.

Great.

And just a follow up really about 2013, I mean, so, you looked at your order book, or you've looked at your product momentum and where you think you're going to go.

You've managed to size up a cost saving.

Could you give us any kind of guidance in terms of what you're seeing (inaudible) in terms of top line growth or top line decline?

I mean, how should we think about that, because sounds like you're very excited about the second half of this year with most of your product gaps sorted out and upselling opportunity to most consumers.

And at the same time, you've looked at your cost base, and you've said, right, we can take out $80 million, understood that you haven't quite worked out whereabouts that's going to come out from.

But, you've made a sizable number, at least 6% of your total OpEx, for example.

So, what should we be thinking about in terms of top line?

Thanks.

Well, I'm glad you asked the question.

And we're not going to give a specific financial guidance for the year.

No, you're right.

We are very excited about the combination of action.

I am personally extraordinarily excited about what we've been able to accomplish in only sort of nine months on the product side.

And what -- and you ain't seen anything yet really.

And yes, we're sort of hoping to provide a double whammy here, much strong product and a lower cost base and a simpler and faster organization.

So, would you suggest that we believe we're going to do better this year?

Fiscal '12 has been horrendous, been the worst year in the company history for in my memory.

But, I am absolutely convinced that this will provide benefit, definitely beginning with the second half of the year.

But, I wouldn't venture many -- much further than that.

And you know why?

I've personally been burned too many times promising and not delivering.

There's no value there.

We will deliver in our product.

Thanks very much.

Your next question comes from the line of Michael Foeth with Bank Vontobel.

Please proceed.

Yes, hello, gentlemen.

Just a follow-up question on the restructuring.

When you talk about these $80 million, what is the basis for those cost savings?

Is it the full year fiscal '12?

Yes, Michael, just to give you a little sense, when we talk about that, we're taking an annual run rate of cost because, as you know, particularly with our business, there's a seasonality aspect to it.

So, the right way to look at the cost base is to look at your run rate over a 12-month period.

So, we take a trailing 12-month view.

And then when we look at that, we fundamentally feel the mixture of things that we're going to go do the detailed work on now will net us $80 million of savings against that.

Okay.

But, again, I mean, I understand that your gross margin targets that you used to have between 35% and 37% is not an official target anymore.

But, my question is, do these cost savings include the fact that your gross margin should be higher going forward than what we saw in fiscal '12 anyway?

No, I mean, I think very consistent to how we just talked about the OpEx piece, there's a lot of variables in our gross margin, right, from that standpoint.

So, at the end of the day, when we figure out what cost we can take out of that run rate, some of it will be things that come through gross margin.

Some of it will come truly through OpEx.

We'll come back and delineate that for you and lay that out for you.

It would be premature for me to say to you I know exactly where it's going to come from.

But, when we model in total, we're very comfortable that we've got the right steps we can go take that would net us that $80 million.

Okay.

And at the same occasion, will you also somehow update these kind of business plan targets that you used to have, or is that not your intention?

Are you referring to the time in which we'll sort of tell you more about the restructuring charge?

No, really more -- you used to share with us kind of a target in terms of -- .

-- I understand -- .

-- Plans.

Well, we -- let me put it this way.

The variability of the impact of the actions that we are taking is pretty significant.

We're restructuring.

We're introducing a brand new incredibly powerful portfolio across a number of categories.

There's way too many variables.

So, we need to learn a little bit.

As we learn the direction of our business, and we'll know more about that throughout the second half of the year, we will -- may become more comfortable in terms of indicating where the Company's going.

I do believe the Company is on the verge of retaking a growth ramp to its past glory.

But, it's way too early to tell.

So, we will learn more quarter over quarter.

I can't guarantee you that we will and when we will revise our business model.

It's too early to tell.

Okay.

I'll be patient then.

Thank you.

Thank you very much.

Your next question comes from the line of John Bright with Avondale Partners.

Please proceed.

Thank you.

Guerrino, could you please characterize the March sales between legacy products and new products?

Let me try sort of qualitatively.

We did grow tablets.

We did grow music, driven especially by new products.

So, that was a significant component of our growth.

But, our mice and keyboard business was quite stable and solid.

It has been like that for the year.

It's ironic because it's one of the sort of -- in the general sort of layperson opinion, it's kind of the doomed business.

It isn't.

And in fact, there are reasons to believe that what we will bring to market associated with the Mac and associated with Windows 8 may actually do something to this business.

But, it's too early to tell.

So, I mean, clearly, the new sector is contributing, more significantly than, if you want, the rest in terms of the growth.

But, also the new categories are way underpopulated today.

We just announced -- we have had tablet products for awhile.

I think that what we announced last week is absolutely dynamite, like, what I say, anecdotally, probably the product that has had higher number of pre-booking on our Website.

It's not huge numbers.

But, if you compare statistically, people are enthusiastic about it.

And more will come of similar sort of, in a way, differentiated nature.

So, music would just begun.

We have two little products.

We have a Mini Boombox, which has done very well.

We just introduced the flagship Air.

Many more products will come in the music before Christmas in wearables as well as speakers and streaming music.

The first signals of the new categories are very good.

But, they're too small to matter.

More will come later.

Regarding Webcams, in a prepared slide, you talked about new products that will enable experiences that cannot be easily achieved with an embedded Webcam.

Can you share with us what some of those might be?

Well, let's put it this way.

Traditional tethered PC Webcams are not going to recover, no matter how inventive we may be with tethered Webcams.

And we don't intend to pursue non-opportunity.

In fact, our mission in that part of our business is to absolutely maximize our margins and our profitability because we do believe that there is a subset, an increasingly small segment of the consumer users of PCs, that do want a better experience.

But, that's kind of shrinking.

And embedded Webcams are very good and not -- they're not fast, but they're very good for the most consumers.

So, what we're looking for is how to deploy the video competencies that we do have in somewhat adjacent areas, things that may work with tablets, guess what, or things that may work with other platforms.

I can't go beyond that.

Okay?

I can't go beyond that.

Erik, gross margins in the quarter were -- continue to be strong, 36-plus percent.

Audio, though, was an outperformer relative to our expectations.

And LifeSize I think was an underperformer, two different gross margins, one maybe below corporate average and one significantly above corporate average.

Can you talk about what's keeping those gross margins so strong?

Yes, no, happy to do that, John.

As you know us well, our gross margin is always a combination of factors, whether it be audio or LifeSize, as you mentioned, or other pieces.

In this particular quarter, one of the biggest drivers, particularly on a year-over-year basis, was that improved pricing and promotion execution in EMEA had a very significant impact to gross margin.

It took us a couple of quarters to get there, as Guerrino talked about.

But, we're starting to see some of the fruits on the profitability side of the work that the European team has been doing.

I think the other thing, to your point, is I think Q4's a very good example where we've talked in the past that, when LifeSize is growing faster than the rest of Logitech, it could be accretive to our gross margin.

This was a quarter where, unfortunately, LifeSize wasn't where they wanted to be on the top line.

But, the portfolio of everything that we do in terms of our products was still able to produce a very solid gross margin.

So, I think it comes back a little bit to how we try to manage it at a total portfolio level.

And I think we feel comfortable that we've got the right mix of things to allow us to keep doing that.

Two final clean-up questions for you, Erik.

One, I think you said you've now repurchased 14% of the shares.

What percentage may Logitech own under both trading lines?

So, today, we currently own about just over 14% of our shares.

And as I think we talked about last quarter, that's when we started repurchasing on a second trading line.

So, everything that we repurchased in the second quarter, which was about 9.9 million shares or $83 million worth, was repurchased on the second line.

But, what percentage can you go up to, to the combined ownership?

Can you go to 20% ownership if you want to?

Yes, no, actually, to give you a better clarification, it really is a bit of a moot point, only because we've announced our intention when we get to our annual shareholders' meeting, which is in September of 2012, is to ask our shareholders for cancelation of all the shares that we've bought back on the second line.

So, that would include what we bought back in Q4, the 9.9 million shares that I mentioned, as well as any shares that we might buy back in Q1 and Q2 of FY '13.

And right now, I don't see any reason why shareholders wouldn't be very supportive of that.

So, we would obviously go down quite a bit in terms of ownership at that point.

Final question, the sale of the manufacturing building in China, does this change the 50-50 manufacturing strategy?

No, actually.

This is a -- it was part -- it was a building that was part of our manufacturing footprint in China.

But, it had been unused for the last couple of years.

And it just took us a little while to make the disposition happened.

And it took place this quarter but really doesn't change the capability and the roughly 50-50 split of how we manufacture in house versus with partners.

Thank you.

Your next question comes from the line of Simon Schafer with Goldman Sachs.

Please proceed.

Yes, thanks so much.

A question for Bracken.

Great to see the pace at which you've begun to at least implement a plan in terms of simplifying structures and costs and so on.

But, I wonder what your perspective is in terms of the Company's ability to see a quick and accelerated time-to-market strategy.

I guess some of the growth challenges that you've experienced as a company is down to perhaps like time to market and so on.

So, just some perspective as to how much of a quick fix that may be, Bracken, would be very helpful.

Yes, I guess my overall reaction to that is I'm really impressed that -- since I arrived, I'm really impressed with the engineering and technology capability here.

So, that side of it is probably the biggest challenge normally in terms of going to market quickly.

On the other side, I think we've got work to do to make sure that we're always launching the most powerful products we can possibly launch.

And Guerrino described some of the products that are coming out right now, which I think, if you haven't seen yet, you're going to find very impressive.

But, I think this can absolutely be a company that launches products rapidly to the right places in the market.

I do think it's more important to get the right products launched than get them launched really fast.

But, that said, we're in a fast-paced market.

So, I think we can do it.

I think we can be a pretty fast-to-market company.

And it really starts with leveraging the strong engineering talent we have here and making sure we've got the right consumer insight to go to the right place.

That's very clear.

Thank you.

And my second question would be, just on the share repurchase program, I think there's about $100 million left, $94 million, or something.

Is the plan and strategy that you would announce, just like you have in previous periods, an extension of the program into future periods?

Yes, Simon.

To give you a little bit of sense of that, our current plan is we feel that the $94 million we have left on the program allows us to do what we need to do in the near term.

And if we get to the point where we approve a new program going forward, that would be something we would communicate at that point in time.

And as we've said in I think our prepared remarks as well is we plan on continuing to repurchase shares in Q1 and Q2 and then the intent to -- as shareholders for cancelation of the balance of those shares when we get to September.

Got it.

Thanks so much.

Your next question comes from the line of Alexander Peterc with Exane BP.

Please proceed.

Yes, hi.

Thanks for taking my question.

I'd just like you to clarify a little bit the movement of sales into the channel and sell through in EMEA.

Sales into the channel exceeded the sell through by about 12%.

But, then when I look at your comments, you said that channel partners inventory in EMEA was down minus 10% sequentially and minus 21% year on year.

So, I kind of can't quite reconcile that, if you could clarify that for me.

Thanks.

Sure, no, be happy to give you a little bit of sense of that.

So, one of the challenges when you compare year-over-year growth rates is it's really hard to factor in everything that's happened in one year period -- sorry, in the period a year ago versus now.

I think the most important metric in terms of -- and it's one of the things that we focus on quite a bit -- when I'm looking at the health of a region when it comes to channel inventory, in this case Europe, I'm really going to look at what's the absolute level of the inventory and what's changed.

And the good news in terms of Europe is our channel inventory is down 21% year over year and down 10% sequentially.

So, we feel that we're in a much better position, clearly, obviously, than we were two or three quarters ago.

And we're going to continue to focus on that quite a bit.

But, when we look at health of the channel in Europe, that's what we're focused on quite a bit.

Okay.

Thanks for that.

Your next question comes from the line of Tavis McCourt with Raymond James.

Please proceed.

Hey, guys.

It's Tavis.

Couple of questions, Guerrino.

Is it still correct to think of tablet peripherals as kind of a low single-digit percentage of sales at this point?

We don't talk about that.

And I would say that we probably won't in the future.

We see increasingly that there is a platform agnosticity taking place in certain kind of peripherals.

And that's the way we're going about it.

We're targeting PCs.

We're targeting Macintoshes.

We're targeting iPads.

We will be targeting the successful future tablets.

There will be some eventually.

So, I wouldn't look at it that way.

I would look at it as, how can we deploy Logitech interface products across the board?

We -- I mean, I am actually very impressed with the success of keyboards for iPads.

The attach rate is pretty high relative to the base.

And that's -- I think the reason is that, increasingly, people do use the iPad to do something more productive than watching a movie.

And that's when they inevitably get there.

And we're ready.

But, there's more to the iPad opportunity than keyboards and pointing devices.

By the way, on non-iOS tablets, the opportunity will combine not only keyboards but pointing devices.

As you know, both Windows 8 and Android support pointing devices on tablet implementations.

And believe me, this is one of the highest demand of people that use tablets for productivity.

You may be amazed to hear it.

But, once you want to use for productivity, you don't just want to keep -- you want a mouse.

So, but, that's beside the point.

I think that the connect rate of keyboards to iPad is quite high.

And so, in a way, as the iPad becomes the incredible success that it's becoming and grows relative to the base of installed PCs and Macs, which is still enormous, that percentage of keyboards will increase.

But, giving you a percentage, first of all, we do not -- and I'm not sure it's so significant.

We're not looking at the business that way.

Let's put it this way.

I gotcha.

And the percentages you gave for percentage of sales with products over $100, what's been kind of the recent high?

I'm trying to gauge if you're successful at kind of the new product portfolio and creating more innovation at the high end.

Where would you like that percentage to go?

And maybe kind of compare it to where it was maybe back in '07 or '08 when it peaked.

Another tricky question, again, not necessarily something -- the lens we'll look through when we sort of plan and execute our business.

We want higher margins.

We want products that are more attractive.

Of course, as you have seen in the few examples that I illustrated today, our new products tend to be in the midrange and kind of high end of that category.

It's not going to be just that.

That's for sure.

There are products that are actually great entry-level products.

But, clearly, the line required a dramatic improvement in the most attractive of its sort of positioning.

And that's what you will see certainly in the fiscal '13 wave.

Let's put it that way.

But, I don't like to look at the business as we have to reach the 60% of sales out of $100, more, higher than $100.

That's not the way I see it.

It may (inaudible) that way.

But, to me, it's gaining differentiated and strong brand positioning across a number of categories, old and new.

And guess what?

It sometimes happens through more expensive products.

But, it's the consequence and not the goal.

I hear you.

And then a final one, Erik, if I was hearing you right on the answer in terms of the gross margin being elevated in the March quarter, I mean, it sounds like you probably had a couple of quarters of channel inventory to take care of Europe that caused some lower margins in Europe.

And that finally settled out in the March quarter.

What I'm wondering is, is there any work to do in that regard in the US still, or should we think about the first half of fiscal '13 as not being encumbered at this point by any excess channel inventory anywhere?

Well, the fiscal -- I'll take the answer going forward.

The simple answer is you can assume that there is healthy, reasonably healthy channels across all regions, and certainly in the two big ones.

It's interesting.

When you compare the performance of the Americas or the performance of EMEA in the last quarter, you see EMEA kind of substantially improved in all dimensions.

You can't find a place where EMEA didn't do.

And you might have the tendency to believe that they are just God and the heroes.

You have to realize that they come from a pretty poor comparable.

And so, they're getting back to healthy.

AMI's been doing quite well across all this period.

What they're feeling right now -- and they're feeling it in the top line more than anywhere else -- is the current weakness of the portfolio across categories, certainly in some in which the AMI's very strong, (inaudible) particularly.

And that hurts.

So, in a way, the two regions come from two different places.

The Americans come from a place of health and is now feeling the need to get fuel.

And we're providing this fuel.

Europe comes from the darkness, and it's now getting back to health.

The two combined provided the performance that you've seen in Q4.

So, net-net, it's -- the engine, the machines, the cars are in good shape.

The pilots are ready.

We need to provide real fuel, and we are and will.

Thanks a lot.

Kind of in a silent situation.

Operator?

(Operator Instructions).

And Mr.

Coster, your line is open.

Yes, thank you.

Good morning, and thanks for taking my question.

The retail -- consumer electronics retail channel in North America is changing pretty significantly at the moment, as you know.

Conventional bricks and mortar are losing out to online, happens to coincide with weakness to you.

But, I'm not sure the two are related.

Are they related?

And even if they aren't, what does Logitech do to respond to this pretty significant change.

As you know, Best Buy's downsizing.

Yes, first of all, Best Buy downsizing, you have to take it with a grain of salt.

Best Buy has 1,100 stores, and they're cutting 50.

And they're opening a lot of smaller stores and in which we hope to be increasingly present, particularly with our music products and with our tablet products.

That's kind of besides the point because your point is right.

The traditional big format retailers are suffering.

There are extremes that are winning, the Wal-Mart extreme, we're doing well there; the Apple Store extreme, we're one of the specialists; and the online extreme, Amazon.

So, clearly, the channel is growing there.

The good news is that, A, we are very strong with online, very strong with Amazon, great customers are ours, very strong with the mass market, mass channels target, and Wal-Mart.

And we are just with Best Buy.

We're not going to go away from them.

And actually, we're going to follow them into this sort of shrinking of the footprint of their stores.

The biggest opportunity we have is the specialty stores and particularly the Apple Store.

We were nowhere in the Apple Stores two and a half or three years ago.

We begin to be present.

And we will be increasingly present in the Apple Stores together with the strengthening of our music line, the strengthening of our offer for the iPad, and with the strengthening of our offer for the Mac.

So, I think we're well positioned across these dimensions.

It's obviously a dynamic that we're watching very carefully.

But, I believe we're capable to respond appropriately.

None of the channels that will clearly over a certain period of time win are new to us or are channels that make us uncomfortable.

We're very comfortable playing in these spaces.

And you know what?

At the end of the day, there is a bunch of consumers out there that will buy great products across the most convenient channel to them.

And we will be where they buy.

Got it.

My other question is, I'm sort of still carrying around with me this notion that Logitech has got a strategic growth initiative associated with the end supplies.

And now, of course, we're going consumer centric and streamlining.

And I'm not sure I reconcile those two.

So, perhaps you could just help me there.

Let me help you here.

First, we do have a significant business opportunity, both in LifeSize (inaudible) but also and increasingly with Logitech products.

One of the four products I mentioned today is exclusively available to the business channel.

And we are increasingly being successful there.

And it really is one of the great opportunities there.

However, if you look closely to this BCC950, the ConferenceCam -- and I hope you had an opportunity to look at it on our Website or something -- it's a true consumer product for the business market.

We will continue to make products for the business market that appeal to the user.

And the user gets more and more power in business.

And every win that we've had has been driven by the fact that every IT manager, every office manager, every employee of the companies in which we've won, knows and likes Logitech.

It's a tremendous sort of reservoir of goodwill that we're tapping into.

But, we're not designing like gray serious products for the enterprise and fancy colored products for the consumer.

We're designing for the end user in the enterprise and in the consumer market.

Thank you.

Your next question comes from the line of Stefan Gachter with Helvea.

Please proceed.

Yes, thanks for taking my question.

On LifeSize, if I understand you are correctly, you remain pretty convinced about the prospect for LifeSize, I mean, given the recent weakness (inaudible) will see from changes in the business model.

But, that seems not to be the case.

I'm just wondering whether you would eventually, I guess not today but further down the road, ever be willing to share some of your midterm targets in terms of, yes, the growth potential and profit contribution potential of LifeSize.

Yes, this would really help us a lot with regard to that topic.

Well, LifeSize, as I said, remains one of our growth opportunities.

I said and I want to repeat that I believe the issues that the division is facing right now are understood and temporary, and we'll get back to growth there.

Clearly, our focus is to continue to grow and increasingly make LifeSize more profitable.

It's a fact.

We're shooting for profitability.

We want to get there.

We have a goal to get there.

I won't share the exact date and month of the year or the century in which that will happen.

But, it will happen.

We're shooting for that to happen.

In terms of describing and articulating a sort of a target goal for growth and profitability, I wouldn't go so far.

We first need to understand the totality of Logitech, including LifeSize, and where it will go.

And as I answered in the previous question, we will not be in a position to truly do that credibly for the world and comfortably for ourselves until we see the trajectory of all the actions that Bracken and the team are driving.

So, at that point, we may or may not be in a position to sort of kind of explicitly talk about LifeSize, but certainly not before then.

Okay.

Thanks a lot for your answers.

(Operator Instructions).

And there are no further questions at this time.

That does conclude our conference call for today.

You may all now disconnect.

Thank you.

Have a great day.