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. I would like to remind you this call is being recorded, including the question and answer portion and will be available for replay on the Logitech website.Joining us today are Guerrino De Luca, acting President and Chief Executive Officer; and Erik Bardman, Senior Vice President of Finance and Chief Financial Officer. I’d now like to turn the call over to Guerrino. Guerrino De Luca Thank you, Joe, and thanks to all of you for joining us in such short notice. It is been less than 60 days since I resumed my CEO position on an acting basis. This has been a busy time with a number of urgent priorities. One of my top priorities was conducting an in-depth assessment of the state of our business for fiscal 2012 and beyond including a number of face-to-face discussions across all levels of our products and sales organization. I just recently completed this assessment and I felt it was important to share our findings with you today, including first and foremost our revised outlook for fiscal ‘12. Given the current state of both the economy and our business in mature Western markets, our previous estimates were overly optimistic. We now believe that for fiscal ‘12 we can deliver revenue of roughly $2.4 billion. Operating income of approximately $90 million, which includes our previously announced $45 million operating loss in Q1, and a gross margin of around 33%, which includes the 26.1% gross margin we posted in Q1. We expect our gross margin in both Q3 and Q4 will be well above the full year average. This new outlook is disappointing to me, particularly in light of the disappointment that preceded it. It’s important to understand that the foundation of our new outlook is an in-depth assessment of the relative strength of our product portfolio in the current economic environment. I drove this assessment, and I have personally confirmed that we have operational ownership of our revised outlook.
Of course our assessments take place against the reality of deteriorating economic conditions in mature Western markets. And there is no question that the combination of weak macro economic environments in fragile consumer confidence is having a negative impact on our two largest sales region, Europe and the Americas.The situation in Europe is compounded by the fact that as discussed in our last earnings call, our channel partners inventory levels are higher than needed in the current environment and we are still in the process of implementing the necessary changes to pricing – to our channel pricing programs, changes that we expect to have completed by the end of the current fiscal year. In the Americas the situation is somewhat different. Over the last several weeks, we have seen many of our channel partners express growing discomfort with the uncertain economic situation. As a result a number of them have chosen to reduce the amount of inventory they will carry, as we enter the holiday selling season, which directly impacts our sell-in to the channel. It will be easy to blame our performance in mature Western markets solely on the economy, but that would not provide a complete picture. The fact is despite tepid economic conditions consumers are still happy to spend their money on great products. Having thoroughly reviewed our retail product portfolio there is no question in my mind that we do not have as many great products as we should. Read the rest of this transcript for free on seekingalpha.com