Logitech Raises Spending on AI and Product Development Amid Economic Uncertainty
Logitech plans to increase operating expenses this fiscal year, betting that artificial intelligence, gaming, and business customers will drive growth despite global economic headwinds. CEO Hanneke Faber said the company will push spending toward the top end of its long-term range of 24% to 26% of sales, up from 24.8% last year.
The Swiss-U.S. maker of keyboards, mice, and video-conferencing equipment is investing in AI for Product Development after cutting costs last year to offset tariff impacts. Research and development spending will reach around 6% of sales, while sales and marketing expenses will rise from about 16%.
"We can and we should invest," Faber told Reuters. "The world is changing so fast with AI, which offers so many opportunities."
Where the Money Goes
Logitech is targeting three main areas: gaming, business customers, and Generative AI and LLM-enabled devices. Gaming remains resilient as younger consumers spend more time on computer games. Business demand is expected to stay strong as companies invest in new hardware following strong earnings.
The company also sees long-term growth potential in healthcare, education, and government sectors.
Supply Chain Headwinds
Middle East disruptions are complicating shipments. Logitech expects a $15 million sales hit this quarter from logistics challenges, following a $5 million impact in the previous quarter. Products cannot reach the company's Dubai distribution center from Asian factories, blocking access to Gulf and African markets despite intact demand.
Logitech has some insulation from rising costs: 78% of its products use recycled plastic rather than virgin material, protecting margins from oil price increases.
Growth Targets
Logitech expects sales of $1.190 billion to $1.215 billion this quarter, representing 2% to 4% growth in constant currencies. The company aims to carry momentum from its fourth quarter into the current period.
Faber said the company emerged from last fiscal year with "such a strong financial base" to fund the expansion. The spending increase comes even as concerns grow about a possible global economic slowdown.
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