LOGI Logitech International SA

Logitech International SA (LOGN.VX) Wednesday said it has bought Italian company Mirial, part of a broader push into the high-growth area of video conferencing that aims to offset sluggish sales of its traditional products amid a slump in demand for consumer electronics across Europe.

Logitech bought Mirial, which provides personal and mobile video conferencing software for tablets and smartphones, for an undisclosed sum and said it will be integrated into its LifeSize unit.

Logitech bought LifeSize in 2009 for $405 million, as the Morges, Switzerland-based company battles the rise of tablet computers eating into its computer peripheral business.

Sales of LifeSize, which competes with Cisco Systems Inc. (CSCO), and Polycom Inc. (PLCM), hit a record in the three months to the end of March 2011, rising 88% to $39.4 million.

Logitech's total sales in the period rose 4% to $548 million, but were hurt by a 10% fall in sales to original equipment manufacturers and a 17% decline in Europe, Middle East and Africa.

The fall in Europe contrasted with a 32% increase in retail sales in Asia and an 11% rise in the Americas, Logitech's largest market.

"This acquisition is a significant step forward in our ongoing efforts to make video communication as ubiquitous as voice-only calls are today," said Logitech Chief Executive Gerald Quindlen in a statement.

"This seems like a sensible addition to Logitech's video conferencing portfolio, and will be good for sentiment," said Bank Vontobel analyst Michael Foeth.

Last November, Logitech said it expected organic growth in the video conferencing market of 15% to 20% over the next five years. Gross margins for video conferencing are expected to be in the 50%-60% range compared with 32.8% for Logitech's total business which includes computer mice and keyboards.

Analysts see limited growth for these traditional products in developed markets, and the growth in LifeSize could help compensate.

A regional slump in demand for consumer electronics led to a recent profit warning from Philips Electronics NV (PHIA.AE) and has hammered sales at electronics retailers.

"Lifesize is still a very small part of the Logitech business, but there is a lot of potential for growth," said Foeth.

"PC sales are being cannibalised by tablets and smartphones, and there's a lot of pressure on companies to do something in this area. Now they have done it," said Zuercher Kantonalbank analyst Andreas Mueller.

Mirial's video conferencing software supports a broad range of platforms and mobile software, including Apple Inc.'s (AAPL) iOS and Google Inc.'s (GOOG) Android.

Logitech reports first quarter 2012 results July 28.

-By John Revill, Dow Jones Newswires; +41 43 443 8042 ; john.revill@dowjones.com

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