Logitech has withdrawn financial guidance for the year and will cut 15 per cent of salaried staff.
French Swiss mouse firm said December sales had been bad all round, and it expected things to get worse in what it believes will be an extended downturn.
Gerald Quindlen, Logitech's president and CEO, said: “During the December quarter, the retail environment deteriorated significantly. We experienced varying degrees of weakness across all geographies and channels as our customers reduced inventory levels in the face of weaker consumer demand.
"Moreover, we expect the economic environment to worsen in the coming months."
The company said it would detail how much the redundancies would cost when it announces its third quarter results on 20 January. It is acting to reduce other costs as well as cutting jobs.
In October Logitech was predicting sales growth of six to eight per cent and a three to five per cent increase in operating income for fiscal 2009 ending March 31 - in the second quarter sales were $655m. The peripherals maker employs 7,000* people.
A Logitech PR called to explain that the company only employs 3, 500 people directly - it is 15 per cent of these people who are losing their jobs - so 525 people.
The full statement is here. ®