Logitech Got Burned for Betting on Video Conferencing Reuters

Buying LifeSize in 2009 has turned out to be a bad idea in the end

  A Logitech Conference Cam
Video conferencing seemed like a cool concept a couple of years ago, when video messaging services were starting to gain wide acceptance, but not all those that tried their hand at it got their money's worth.

Video conferencing seemed like a cool concept a couple of years ago, when video messaging services were starting to gain wide acceptance, but not all those that tried their hand at it got their money's worth.

Then again, the video conferencing industry as a whole has proven somewhat less lucrative than anyone expected, so it isn't just Logitech feeling the hit.

Still, the Swiss peripheral maker is the one that spoke to Reuters earlier, saying that recent quarters showed a slowdown.

In fact, Logitech's goal was to make sure people didn't expect its next quarterly financial report to glow.

According to the IT player, the video conferencing business, formerly LifeSize, won't have anything to brag about.

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

Not only will Logitech post losses, it will show a massive money loss of $211 million / 158 million Euro for Q4 2012.

That's enough to obliterate the previous quarter income and make it so that several more months need to pass before the money is recovered, if it ever is. That the monetary blow isn't likely to happen again is only a small consolation.

All in all, it is a far cry from the hopes that Logitech had back in 2009, when it bought LifeSize (the video conferencing company) for $405 million / 304 million Euro. Polycom and Cisco have been experiencing similar disappointment in this field, though we don't know any figures yet.

It is fortunate for Logitech that it makes a lot of money from its core business (peripherals) and that its brand strength is high enough that it can survive an impact like this.

Comments