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Stock of the Day
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Logitech (LOGI)
Logitech Focuses the Lens on LifeSize for $405 Million
Logitech has agreed to acquire LifeSize Communications for $405 million in cash. LifeSize Communications is an $80 million dollar startup company that specializes in offering HD video conferencing technology and services to businesses. Logitech has been looking for an opportunity to expand its market scope, and LifeSize appears to be it. However, Logitech's strong suit is more aligned with providing telecommunication and computer peripheral products to consumers not businesses. Despite the difference in targeted customers, Logitech seems eager to break out of its comfort zone and breach new horizons. But why is Logitech so anxious to enter an industry flooded with powerhouse competitors like Cisco (CSCO: Charts, News, Offers), Microsoft (MSFT: Charts, News, Offers), and IBM (IBM: Charts, News, Offers)?
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Logitech believes that LifeSize's technology will, "make lifelike, HD-quality video communication as mainstream and seamless as a telephone." It is with this rationale and purpose that Logitech enters the teleconferencing industry. Logitech intends to expand on LifeSize's current business model of offering affordable videoconferencing technologies. Logitech International will continue to service the traditional business clients with boardroom installations, but it also recognizes that LifeSize's affordable technology has the ability to push the breadth of potential customer markets much wider. Logitech sees the opportunity to offer HD teleconferencing capabilities to home webcam users at a reasonable price, which it believes to be a lucrative market.
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The synergy of Logitech's customer experience and LifeSize's technology make this a very enticing proposition. LifeSize Communications has already demonstrated the ability to produce affordable HD videoconferencing equipment, but has not rolled the product out to the commercial market. The expansion of LifeSize's customer base is where Logitech enters the picture. The Swiss webcam manufacturer is very familiar dealing with commercial customers, particularly home users. Logitech hopes that it can open the HD teleconferencing technology to an entirely new market, but it needs LifeSize's technology. So, Logitech decided to buy LifeSize Communications.
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Overall, Logitech seems to have a strong entry plan to the teleconferencing industry. The combination of LifeSize's affordable technology and Logitech's commercial expertise look like a very nice fit for expanding the teleconferencing market to home users. In addition, Logitech will have the opportunity to build on LifeSize's current business and revenue stream. However, Logitech International will be met with heated competition from industry rivals as it tries to carve out market share. There is a concern that LifeSize and Logitech may not be able to streamline the price enough for it to be appealing to domestic customers. Despite these obstacles, Logitech is focused on the big picture, and sees great potential in its newest acquisition, LifeSize Communications.
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Other Logitech Related News:
Video Communication: Now in High Definition -- A closer look at Logitech's new lineup of product offerings .
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More Stocks in the News:
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Macy's Reports Loss; 2009 Forecast Trails Estimates -- Macy's (M: Charts, News, Offers) misses Wall Street expectations. How does this department store titan feel about this year's holiday shopping?
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Click here to view a detailed profile of Logitech.
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