Joe Greenhalgh - Vice President of Investor Relations Mark J. Hawkins - Chief Financial Officer, Senior Vice President Finance and Information Systems Guerrino De Luca - President, Chief Executive Officer and Director

Ted Chung - Bear Stearns Matthew Yates - Merrill Lynch Manuel J. Recarey - Kaufman Brothers John Bright - Avondale Partners Michael Foeth - Vontobel Tavis McCourt - Morgan Keegan Odon de Laporte - Cheuvreux

Good morning. My name is Brandy and I will be your conference operator today. At this time, I would like to welcome everyone to the Logitech fourth quarter fiscal 2007 earnings conference call. (Operator Instructions) I would now like to turn the conference over to Gene [sic] Greenhalgh, Vice President of Investor Relations. Please go ahead, sir.

Thank you, Brandy. I would like to welcome you to the Logitech conference call to discuss the company’s results for the quarter ended March 31, 2007, the fourth quarter of Logitech's fiscal year 2007. A press release, a live webcast of this call and the company’s presentation slides are available online at logitech.com. This conference call will include forward-looking statements that are being made under the Safe Harbor of the Securities Litigation Reform Act of 1996, including forward-looking statements with respect to future operating results. The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from that anticipated in the statements. Factors that could cause actual results to differ materially include those set forth in Logitech's annual report on Form 20-F dated May 19, 2006, and subsequent filings available on line on the SEC Edgar database, and the final paragraph of the press release reporting fourth quarter and full fiscal year results issued by Logitech and available at logitech.com. The press release also contains the company’s financial information for this call. Forward-looking statements made during this call represent the management 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 that this call is being recorded, including the question-and-answer portion, and will be available for replay on the Logitech website. For those of you just joining, let me repeat; the presentation slides accompanying this call are available on the website. Joining us today from Zurich is Guerrino De Luca, Logitech's President and Chief Executive Officer. Here in Freemont, we have Mark Hawkins, Logitech's Senior Vice President of Finance and Information Technology and Chief Financial Officer. I would now like to turn the call over to Mark.

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IR firm sponsors transcript of micro-cap company: Consulting company sponsors company's transcript in sector of interest: Your company's name and promotion could have been on this transcript! Learn more, or email Zack Miller for details. Mark J. Hawkins: Thank you, Joe, and I will begin with an overview of our performance. It was our best Q4 ever for sales and profit. We delivered the highest gross margin for Q4 in the history of our company. This was our 34th consecutive quarter of double-digit growth, so the string does continue. Our retail sales growth for Q4 was constrained by a year-over-year decline in webcams, but we experienced a strong demand across most of our portfolio, with accelerating growth in cordless, gaming, PC speakers and harmony remotes, so the portfolio is working. We ended the quarter with the highest cash balance in the history of our business. For the full year, we did fall short of our increased target for year-over-year sales growth due to webcams in Q4 while we achieved an upwardly revised goal for our operating income. Our comments during the call about gross margin, operating expenses, operating income, net income, and EPS for Q4 and FY07 will be based on non-GAAP numbers that exclude 123-R costs. This is consistent with the way we normally do that. So let’s begin with Q4 and discuss our gross margins. Our gross margins reached an all-time high for Q4 at 34.5%. It was basically a 260 basis point improvement compared to the prior year, so we are very pleased to see that. A lot of you recall our discussions a year ago. The improvement was driven by the same factors that we have emphasized for the last three quarters: the launch of innovative new products throughout the year that basically had higher margins and they replaced products with lower margins, so we are pleased to see that; we achieved strong year-over-year gains in cordless, corded, audio and gaming, with the largest improvements in cordless and gaming. The improvement in cordless was primarily driven by our cordless desktops and keyboards; our PC speaker margins continued to improve compared to the prior year, another good story. Please note that the growth percentages that we will be talking about that follow are in comparison to the same period for fiscal 2006. Our operating income grew by 9%. Our operating margin was essentially unchanged at 11.7% compared to 11.8% last year. If you take a closer look at our operating expenses, our sales and marketing grew by 24%, with the growth being driven primarily by marketing activities in support of our retail business and headcount increases that took place throughout the year. Research and development was up by 20%, with the majority of the growth driven by investments and product development in key categories, things that we have talked about before -- again, remotes, audio and video. The G&A increased by 31% primarily due to costs related to 11-I and the support of 404 certification. Again, we have talked about that quite a bit in the past here. So now, let’s talk to net income. Our net income grew by 14% and our net margin was 11.4%. Our earnings per share were up by 15% to $0.30, and so that gives you another feel from our earnings standpoint. Our tax rate was 12.1%, and as we said before and I have talked to you guys a number of times about this, our tax will vary by quarter but again, it came in the range that we expected. Our sales grew by 15% to $2.1 billion. Our sales in the retail business grew by 16%, with the growth achieved in overall major categories. We also saw OEM grow by 6%. Gross margin reached a record high for the year at 34.4%, up 240 basis points compared to fiscal 2006. We achieved strong year-over-year gains in cordless, corded, audio, video, and gaming, with the largest improvements in cordless. Consistent with our strategy, we managed our operating growth in line with our growth in gross profits. Our net income grew by 35%, significantly outpacing the 26% growth in our operating income, due to a combination of higher interest income and a gain on the sale of our noted shares and a lower tax rate, and our EPS grew by 38% to $1.27. Now, let me turn to the balance sheet. Our net cash position was $399 million, which includes $215 million reported in terms of short-term investments. Now let me just pause and say this was the highest ending cash balance in the history of the company. Our net cash increased. It was increased by $168 million, or 73%, compared to the prior year. The increase versus the prior year I think it is important to know was even more impressive if you consider the fact we spent $20 million on the acquisition of slim devices and $138 million on share repurchase. Our cash flow from operations for the quarter was $93 million. Our cash conversion, which I talked about this over the last year, our cash conversion cycle was 54 days, another six day improvement compared to the same period last year. At the start of the fiscal year, we said we expected significant improvement in our cash flow from operations during the full year, and in fact we delivered. We doubled our cash flow -- just slightly more than doubled our cash flow from ops for the full year at $306 million. Our inventory, we ended that up $21 million more inventory in March than in the prior years. This was an 11% increase and I would say that this is consistent with the top line growth that we have had. Our inventory turns were right in line at 6.2 compared to the prior year at 6.4. Our DSO, here is another area I was pleased about in terms of we were able to deliver again year-over-year improvement in DSO. We talked about doing that. Again, this has come forward. Our DSO was at 54 days for the quarter, which is a reduction of two days compared to the prior year and three days sequentially. Let’s turn to share repurchase. During Q4, we repurchased 1.88 million shares for $52.4 million at an average share price purchase of $27.89. For fiscal 2007, we repurchased 5.6 million shares for $138 million at an average price of $24.62. We own just under 5% of our outstanding shares, and I will call out -- I think you will be interested to note that we have $174 million remaining in our current repurchase program. You know our history of buying back the stock. We think that is a good thing for the company. Now let’s discuss sales in Q4 by product family, starting with retail, so I am going to delve a little bit deeper to the top line. Our retail sales grew by 9% and our units were up by 3%. We achieved solid growth in our two largest regions. The Americas grew by 12% and EMEA grew by 9%, with the webcam decline in both regions being more than offset by strong growth in multiple categories. So again, the portfolio in play. Cordless and harmony remotes were the primary drivers in the Americas and gaming and audio led the way in EMEA. Our sales in Asia declined by 4%, with our growth restrained by an organizational transition in Japan that we discussed during the January earnings call. Let me just note here that while there is still work to be done, we are making progress and we expect to begin to see some improvement this quarter. If I turn to retail sales cordless, we delivered double-digit growth in cordless for the fourth quarter in a row. Sales were up by 22% with unit growth at 12%. I should note here that it was a great quarter for cordless desktops and cordless keyboards, with sales growth accelerating to 30% and unit growth of 13%. We achieved our highest growth in cordless desktops in the last ten quarters, with sales and unit growth across all major price bands, so we were very pleased to see that. We continue to be pleased about the strong consumer demand for our high-end cordless keyboard, the diNovo Edge. It was a solid quarter for cordless mice, with a sales growth of 14% and unit growth of 12%. We saw particular strength in the mid-range of our category and we also saw continued strength in our notebook category, with the sales of cordless mice for notebooks growing 35% and again, on units up by 27%, so a good trend to continue to see there. Retail sales in audio, our audio units grew by 11% and if I go deeper into that, I will peel that back a few layers, our speakers were up by 17% on units of 21%. It was a strong quarter for our PC speakers, with sales growth accelerating to 26% and unit growth by 22%, reflecting success particularly in our high-end and our entry level. Sales of our iPod and MP3 speakers, they declined by 27% but the units grew by 3%. And if I address that last point and take it a little deeper, the decline reflects a combination of softness in the iPod peripheral market and a very weak sale of our high-end Logitech AudioStation due to a variety of quality issues that surfaced as we ramped into full production. It was a solid quarter for our PC headsets, as the sales in that particular area grew and units grew by 10%. If I then turn my attention to video, frankly it was disappointing for the quarter for our webcams, with sales down by 32% and units by 22%. The sales decline was experienced across all major price bands. We entered the quarter focused on improving our webcam market position but there was an unexpected category decline that led to a decline in sales. Now, I am just going to pause on that. Guerrino is going to talk quite a bit more about that and what our plans are to improve that going forward. If I shift into retail sales corded, we achieved growth in the corded category with sales up 5% and units up by 2%. The growth in the corded category was entirely driven by our corded keyboard sales, which were up by 27%, and the Logitech Alto -- let me speak to that a little bit. This is our portable notebook stand with an integrated keyboard. This made a significant contribution to the growth in the particular category. If we turn now to gaming, it was a turnaround quarter in the gaming area with sales up 35% and units by 3%. This was our highest quarterly growth in the category in the last two years and reflects a return to growth in the console gaming, combined with a continued strong growth on the PC side, as expected. Our console gaming sales increased by 9% while units were down by 5%. We really are pleased to see the growth in the console gaming for the first time in the last six quarters, and there has been quite some discussion in anticipation of this. We are now seeing the light effect and the fact that PlayStation is now starting to kick in and we are seeing that starting to fuel our console growth, so that is good news. It was another great quarter for PC gaming, with our sales growth at 46% and our unit growth of 9%. I might call out, just to give you a little bit more detail, the sales of our steering wheels nearly tripled, primarily due to the strong demand for our G25 Racing Wheel. In terms of retail sales other, sales were up by 64%. I think I have shared quite a bit quite a few times that the Harmony remote is the lion’s share of retail other. This grew by 78%, and the growth was strongest in the Americas, driven primarily by our flagship remote, the new Harmony 1000. The growth in the other categories also reflected some contribution in the 3DConnexions as well as Slim Devices. On the OEM sales side, we finished with our best quarter for the year with sales growth of 16%, delivering a return to our double-digit growth that we anticipated. Now, the biggest contribution in this growth for OEM came from the cordless desktops, with sales up 65%. So the customer transition we talked about before has been completed. Our mice sales were flat, with units down 3%, but we had solid growth in both video and corded within this OEM category. So let me come to a conclusion -- we delivered our best Q4 and fiscal year ever for sales and profit in the history of the company. We experienced accelerating retail sales growth across a number of our product categories. Our portfolio and model and is working. We significantly improved the efficiency of our working capital. We delivered the best ever $306 million in cash flow from operations for the year. We strengthened our balance sheet. Our gross margins are up and we finished with the highest cash balance ever. Before concluding my comments I want to remind you that the fiscal 2008 investor meeting that we are scheduling is planned for May 10th in London. The agenda will feature a number of our senior executives reviewing our strategies and opportunities for fiscal 2008 and beyond, and I do hope that you will be able to join us. With that noted, let me go ahead and turn the call over to Guerrino.

Thank you, Mark, and thanks again to all of you for joining us today. I am very pleased with the company’s performance in fiscal ’07 that saw record breaking performance in each of the four quarters. Fiscal ’07 was Logitech's best year ever and our ninth consecutive year of double-digit growth in both sales and profit. In spite of falling short of our upwardly revised sales growth target, our cash performance was outstanding. We delivered the highest gross margin in the company’s history. We increased our operating margins by 100 basis points to 12.1% of sales. We grew our net income by 35%, improved our net margin by 170 basis points, and we delivered against our increased full year profit growth target by achieving a 26% growth in operating income. Let me comment on our Q4 performance, starting with webcams. After six quarters of double-digit growth, we hit a speed bump. Since before Microsoft entered the category in the summer of 2006, our total focus has been to limit the impact of their arrival on our market share. We were largely successful in this, particularly in the U.S., where the share improvement we saw in December and discussed during our January earnings, have been sustained. We had also assumed that the arrival of Microsoft would help fuel the growth of the webcam category. Had that happened, our relatively small loss in market share would have been more than off by the incremental market growth. Unfortunately, that growth did not materialize. While we were focused on defending and improving our market share, our traditional market development activities that have built the category over the years took a back seat and the market growth slowed significantly. Over the next few quarters, we plan to reignite webcam market growth by targeting our marketing activities toward growing the overall category. We plan to leverage partnerships, as we have done in the past, to broaden consumer awareness. We will also increase in-store activities to help consumers appreciate how they can benefit from using a webcam and, as you would expect, we have a broad range of new webcams lined up for launch later in this year. At this point, going into more detail on our action plan would be inappropriate for obvious competitive reasons. It is however worth noting that all of our product categories go through cycles and webcams is no exception. Our webcam sales have declined several times before and we have always returned to strong growth. We are confident that our efforts will lead to the return of double-digit growth in our webcam sales by the second half of this fiscal year. Other than the webcam issues, I was very pleased with the strong sales we achieved in many of our product categories. The acceleration of growth in Harmony remotes, cordless, and PC speakers, the strong turnaround in gaming and the double-digit growth in OEM are all indicators of the resilience of our portfolio and the health of the categories in which we play. The 22% growth in cordless, driven by our best quarterly growth in cordless desktops since fiscal 2005, is a great example of product cycles. Last year at this time, we had just completed a year with no growth in cordless, and just one year later we are looking at the category with accelerating growth in the quarter and faster growth for the year than the total company. Our gross margin performance in Q4 was outstanding. As we have said, product mix played a major role in gross margin. When you consider that video is a relatively high gross margin category for us, delivering a 34.5% gross margin with significantly less video in the mix is a confirmation of the innovation value and cost performance we delivered during fiscal ’07 across the whole portfolio. Let me move on to fiscal ’08. Our strategy remains to position Logitech as a premium supplier in our category, offering affordable luxury to the consumer while continuing to aggressively compete, from the entry segment to the IM. We enter fiscal ’08 focused on several priorities, with continued double-digit revenue growth at the top of our list. We expect to launch a superb set of new products during the year to take advantage of growth opportunities across our portfolio. The growing popularity of notebooks is a trend that has contributed to our growth. In fiscal ’07, our sales of notebook peripherals grew by 57%, primarily due to the strength of our cordless mice offerings, which we plan to expand and enhance during the year. We are quite pleased with the initial response to our notebook spend on Logitech Alpha, and we are excited about the potential for similar products aimed at bringing the comfort of the desktop PC experience to the notebook user. We have a number of innovative keyboards and desktops on the horizon that we believe will allow us to build upon the momentum that we have achieved in this category during fiscal ’07. In fact, we believe that this could be one of our fastest growth areas in the new year. We still see lots of opportunities in mice, particularly when it comes to improving the navigation in the digital world. Later this year, we plan to once again reinvent the mouse with navigational capabilities that will bring a new level of convenience and functionality to the user. We delivered double-digit growth in retail audio in every quarter of fiscal ’07 and we believe that this category will continue its momentum in fiscal ’08. The 35% full year growth of our speaker sales is a sustained indicator of the broad-based appeal of our offerings and the growing penetration of digital music. We plan to introduce a variety of new PC and iPod speakers for all major price points and will continue to use software as a key source of differentiation here, building upon the innovation we introduced with our Z10 PC speakers. Speaking of digital music, we are excited about the potential of our Slim Device acquisition. We believe that the Slim products, most of which will soon feature the Logitech brand, along with the talented team that joined us put us in a strong competitive position to deliver easy-to-use, feature rich wireless streaming of digital content from the Internet or the PC, throughout the home. Turning now to gaming, we are quite pleased with the strong turnaround in gaming that we achieved in the fourth quarter. The strength of our Q4 performance even allowed us to deliver 6% growth in the category for the full year. Our initial PS3 offering has been well-received and there are more in the pipeline. We also took note of the success of Nintendo’s Wii and we plan to address that platform later this year. We believe we have turned the corner in the gaming category and we are expecting double-digit growth for the category in fiscal ’08. Our Harmony remote grew by 60% in fiscal ’07 and nearly reached $100 million in sales. As pleased as we are with the progress of this business, the opportunities for continued growth have never been more promising. There is plenty of upside in the U.S., where we have achieved most of our success, and we are at the early stages in Europe and Asia. During the new year, we will continue our focus on improving every aspect of the user experience to further increase our already high level of customer satisfaction by significantly expanding the potential universe of Harmony users. You can also expect continued improvement and innovation on the hardware side in this category. Another priority for fiscal ’08 is to enhance the scalability of our operation. We have made a number of investments during the last year across all functions. We added headcount in sales and marketing and in engineering to drive future growth, and we have invested heavily in G&A to support our implementation of Oracle and M&I, achieve SOX 404 specification, and support our growing business. We believe these investments have left us well-positioned for fiscal ’08 and we are committed to continue managing our operating expenses in lien with our gross profit growth. Scalability goes well beyond the relationship between growth and spending. We introduce over 100 new products every single year, many of which feature significantly more innovation and complexity than the products they replace. Processes that worked well when we were a smaller company need to scale as we grow. You know Logitech as a tremendous product machine, and we will build on this strength. During fiscal ’08, we will focus on improving every stage of our product lifecycle management process, starting from idea generation to end of life. We also plan to significantly strengthen the voice of the end user, our ultimate customer, in product design, marketing and support activities. We believe that these efforts will eventually lead to a number of measurable benefits, including faster time to market, better quality products, higher sales and margins, and increased customer satisfaction. That brings me to our financial goals for fiscal ’08. For fiscal ’08, we target both sales and operating income to grow 15% compared to the prior year. We expect gross margin to be at the high-end of our long-term targeted bracket of 32% to 34%, and we expect our effective tax rate to be around 12%. Fiscal ’07 was the best year in our history. We said we would improve our profitability and we did, with our best gross, operating and net margins ever. We also said we would improve our cash flow from operations and we doubled last year’s total. We enter fiscal ’08 well-positioned for sustained growth and profitability, with an innovating and appealing product roadmap targeted at substantial growth categories, a broad and resilient product portfolio, and a strong and experienced management team focused on delivering against our targets. At this point, I would like to open the call to your questions. Please follow the instructions of the operator.

(Operator Instructions) Your first question comes from Ted Chung with Bear Stearns. Ted Chung - Bear Stearns: Thank you. I just have a more detailed question regarding the webcam business. It sounds like you actually maintained share in the market but attribute the weakness to the general weakness in the market itself. What type of activity are you specifically looking at in terms of demand generation?

Thank you, Ted. First of all, we lost share year over year. It was inevitable for us to lose some. When a big player like Microsoft comes in, they take some share. We lost some. I would say I would position our loss between 10 and 15 points. We are still by far the largest player in the category -- I’m saying by far; three times, more than three times bigger than the second player. We were focusing on actually limiting that share loss, and in fact we did. In every other category in which we compete with Microsoft, we are head-to-head and we have -- so you can see that as a success. So what happened, as I said in my comments, is that the market that has been growing at a very hot rate throughout the entire calendar 2006 had a significant deceleration of growth. The combination of lost share and that caused our shortfall. You asked what are we going to do. I said that we are going to refocus a marketing approach that has been fundamentally on holding or defending our share for the last six months, which has been unusual for us in webcams since the beginning. From the beginning of the webcam category, we have been the market developers with the webcam. We have told the world what to do with that and we stopped. The reason we stopped is that we thought that the arrival of Microsoft would actually create that element of market development that we were not pursuing ourselves. In fact, it didn’t and we can talk a long time as to why it didn’t but it didn’t. So now we are going back to refocus what we used to spend in promotional share defending point of sales activities into point of sales activities and partnerships that actually promote the category, so everybody will win, including our beloved friends at Microsoft, but we believe that the market leader has this responsibility and we will go forward with that. Going into more detail as to what exactly we will do, with whom we will play, which partnership we will turn on, it is a little bit sensitive at this point and I would prefer not to comment further. Thanks. Ted Chung - Bear Stearns: A separate question; regarding the issue with AudioStation in the audio category, has that been addressed already?

That has been addressed. It is unfortunate, the product problem. It happens, even to us. Related to the fact that AudioStation contained technologies, particularly in the touch panel, the touch sensitive panels instead of buttons and knobs, that we did not master fully and that as we started to ramp the product, it was actually late in delivery, but as we started to ramp, we figured out that it was not on par and that we decided that was not something that we could pursue. It is actually a fundamental reason for our pick-up in iPod speakers, so we are -- like I say, the problems are fixed. The unfortunate thing is that we missed the big season and that does not come back easy. But we will be back with AudioStation moving forward, so I would look at that as just an accident, unfortunately. Ted Chung - Bear Stearns: Last question; this is typically the time when you initially show your new products to the retailers. Have you gotten any feedback from them regarding the new products being positioned for launch for the second-half of the year?

Well, in fact our -- what we call our customer showcase time is around the June timeframe, not now. Ted Chung - Bear Stearns: Right, you initially have some conversation with some of retailers.

As well, we actually try to hold the news to those carriers. These are big extravaganzas that we do, both in the U.S. and in Europe with our European and American customers, as well as in Asia, and they take place in June. So we have not shown much yet. Ted Chung - Bear Stearns: Great. Thank you.

Your next question comes from Matthew Yates with Merrill Lynch. Matthew Yates - Merrill Lynch: Good afternoon. A couple of questions, please. Firstly, I think, Guerrino, you said in your remarks that marketing had taken a bit of a back seat recently in webcams. If pricing has been the main way you have tried to defend your market share so far, how come that did not create more of a price elasticity effect on demand?

Well, the truth is that -- first of all, marketing did not take a back seat. Pricing and promotional activities are marketing. It is not just market development. What I said, maybe I did not say it right but what I said or I meant to say is that our market development activities took a back seat. By market development, I mean those activities that tend to promote the category as a whole and products with that, but -- activities such as showing at the point of sale what you can do with a webcam, how easy it is for you. There is a very large population on the verge of adoption here and I think that we, by not continuing these promotional marketing or market development activities, we missed that. So the category is in between mass adoption and early adoption and we believe it is our responsibility to move toward the adoption. Yes, we did do promotional activities, not as frantically as we have seen a number of small players do in the category. If you will remember last quarter, we talked about a very aggressive promotional environment from the smaller players that did not want to get kicked off the shelf from the arrival of Microsoft. That continued brutally in Q4. So we did participate in some of that but not much of that -- enough to maintain our share, let’s say, but the category did not grow, or grew very modestly. When that happens, you address the same crowds and nobody wins. That is why we have decided that we have to refocus to what we have done for the category for a while and that is why we believe we -- there will be a number of tactical things we will do in the short-term and I will not discuss those, but the fundamental posture we are taking is one of market development and that is why we expect to see our sales in webcams going double-digit again in the second half of the year. Matthew Yates - Merrill Lynch: The second question is somewhat Microsoft related, in that you have seen a big player come into a market and as you say, not necessarily brought too much growth, just simply taking some share. Is there any worries you have with regards to Philips? They seem to be paying more attention and allocating more capital towards peripherals.

How do I answer this? I have to be appropriately wording this. I do not believe that Philips has the muscle of Microsoft in the mind of the consumer in any of the PC-related categories. We respect all competitors, of course, but I would call it a different order of magnitude of entrance. Philips has been in this webcam business for a very, very long time and has not made a particular dent on the market share charts, from what we see. Matthew Yates - Merrill Lynch: Could you give some sort of update on how the integration of Slim has gone and the kind of rollout phase to get that product into the big box retailers?

Well, as we speak, that is what is happening and we are transitioning the Slim Device products to the Logitech brand, which you would expect us to do, as we speak, we are talking in the coming weeks, and we had very advanced conversations with several businesses that are very excited about the category, so let’s see. I am very optimistic about this being the beginning of another triple-digit growth business for us and so stay tuned. Matthew Yates - Merrill Lynch: Okay, thanks for taking the questions.

Your next question comes from Manny Recarey with Kaufman Brothers. Manuel J. Recarey - Kaufman Brothers: Good morning. Thanks. You had mentioned that you have experienced slowdowns in the webcam market before. Could you comment on typically how long that that has lasted, the slowdown, and how long before you started to see a rebound?

Well, if you look at the growth profile of several of our product lines, including webcams, we have seen slowdowns meaning negative growth -- that is what I mean by slowdown in this particular case, negative growth to us -- that lasted between one and two quarters. I would not go as far as mentioning what will happen with webcams right now but as I mentioned, the main driver of this decline on our side is a significant slowdown of market growth. We are planning to reignite that. I would not expect that will happen overnight. We point to the second half of the year as the time in which we expect our sales to rebound at the double-digit level. We are not providing more details. It is a short time -- it’s an appropriate -- certain that what we believe we can do over time. Manuel J. Recarey - Kaufman Brothers: If I can move off into the webcam market, looking at the Americas versus EMEA, Americas I think were up 9% but units were down, where EMEA I think the units were up as well as the revenue was up. Could you give a little bit more color on what is going on in the dynamics there for mix?

Well, Mark said a few things about what drove growth in the region. I would say that growth was driven by higher price point products in AMR than in EMEA. For example, we had a tremendous success with Harmony 1000, which is, while very affordable and correct at price, a pretty expensive product. So that helped a lot in the ratio between revenue growth and unit growth in the AMR. Manuel J. Recarey - Kaufman Brothers: Thank you.

Your next question comes from John Bright with Avondale Partners. John Bright - Avondale Partners: Thank you. Guerrino, Mark, and Joe or was that Gene?

Thanks for bringing that up, John. John Bright - Avondale Partners: I wasn’t sure how that was going to go there.

We knew you would probably weigh in on it, John. John Bright - Avondale Partners: We talked I think of webcams ad nauseam. Let’s talk on the cordless side of the equation. I think the drivers, it looked to be a pretty strong tick on the cordless side. Can you elaborate on that first? And then, two other segments, if you could elaborate. Gaming, a real big quarter; PS3 I think certainly a driver there. Guerrino, I think it was you that mentioned the potential of getting into Nintendo this year as well. Can you elaborate on that please? Lastly, on the top line, the OEM, very strong double-digit growth on the OEM. How sustainable is that heading into fiscal year ’08?

Well, you asked about cordless, gaming and OEM. Yes, cordless was -- first of all, cordless is our largest category so to see that kind of growth in our largest category and a category that has been pointed to as sort of a dead body for some point in time is actually what I was trying to say in a little bit more politically correct words before, which is we have seen this. Things come back. The market is there. In this particular case, not only our cordless mice did great but our cordless desktops and keyboards were just phenomenal, which means of the a category that among the dead was considered that most dead is the one that drives that most growth. Sometimes things are not as they appear. I think innovation played a huge role there. I think the diNovo Edge was fantastic, but even the mainstream, well-priced and for once well-featured mid-range did great in cordless desktops, the vanilla mid-range desktop that has been a source of concern for a while. Those were the culprits and as I said in my remarks, I would not be surprised if this cordless desktop and keyboard categories becomes one of our largest drivers of growth next year, or this year. On gaming, first of all the first commentary is we are absolutely pleased with what is happening in PC gaming. This category is another category that we have given some depth three years ago has actually done wonders to us. I believe that what we did in gaming keyboard and gaming mouse, particularly gaming keyboard, is just phenomenal and we believe that it will continue to sustain growth. Yes, we are finally back on consoles. It took some time. It took for PlayStation 3 to finally get out of the penalty box and not only launch in Europe but establish itself elsewhere. This is the cycle and this is when we thought that we would start to see growth and we are seeing it. We have a few products and others coming. Yes, I said we will go Nintendo. We have not had a product for a Nintendo platform for I think three or four years, something like that. We had a wheel, modestly successful wheel on previous generation Nintendo Gamecube. We think we can do a lot, especially in game-specific devices, but I think my PR people will kill me if I say more, so I won’t. John Bright - Avondale Partners: Anything from a Microsoft standpoint in that arena?

Not much. Microsoft continues to have the cloister they have on licensing and we have never depended on them here and we probably won’t. John Bright - Avondale Partners: Right.

You asked about OEM. Yes, it was great to see that finally we were out of the tunnel in OEM growth and we have seen with a very strong 16% growth this quarter. We believe we will see growth. It is hard to pin it. It is kind of -- I am hopeful that we will see double-digit growth but it is a little bit more uncertain than when I talk about our 15% growth for the company. John Bright - Avondale Partners: Right, right, so then just a couple of final ones. You now have two quarters in a row of 34% plus gross margins. You are talking about the high-end for fiscal year ’08. You have made a number of changes that you have put in place. What is the sustainability do you think of staying up there, that 34% gross margins, particularly as you have again some newer products that have come online as we approach the June-August timeframe?

We do not expect our new products to be a negative impact on the margin, so that -- we have learned some lessons here. On the other side, I think that 32% to 34%, as we are driving for top line growth, we have to assume the 32% to 34% is a reasonable estimate of our sustainable gross margins. For fiscal ’08, we expect to be at the high-end of this range, as I said, but the core thing that matters to us is that our current gross margin levels provide us with increased flexibility to maneuver in what is a very highly competitive market. If anyone ever thought that the markets in which we play is a piece of cake, they are not. We can handle it but we need to use all the levers we have and I am very happy that we have this little cushion on the margin side to play the growth in. John Bright - Avondale Partners: Right. Last one, Mark, on the operating -- on your other income. It looked like you had something a little bit better, or something in the other income other than an interest expense benefit, or an income benefit. Can you talk about that? Mark J. Hawkins: A couple of things here, John. One on the other income, other expense line. We had the gain on the sale of the Anoto shares. We had a small gain of about $2.5 million from that standpoint, so that is one of the things there that created a slight improvement year on year -- not hugely material but something to call out. Then, as far as on the interest income, the other aspect of that, it is no surprise with the cash balance being up so high plus we are getting a higher rate of return. That gave us a nice lift in the interest income as well. So those are the two dynamics, John. John Bright - Avondale Partners: Gentlemen, thank you.

Your next question comes from Michael Foeth with Banque Vontobel. Michael Foeth - Vontobel: Good afternoon, gentlemen. I have a few questions. First of all, regarding the iPod peripherals market, you note a decline. My question is, is that decline specific to Logitech or is the entire peripherals market down? Is it somehow related, do you believe, to the launch of the iPhone that is coming up? That is the first question. The second one would be regarding Harmony. If I recollect correctly, in 2008 you will eventually have to pay some earn-out for the Harmony acquisition. Can you be more specific on how much cash outflow do you expect on that? The third question is just a clarification, whether the market share loss in webcams, you said 10 to 15 points. Was that basis points or percentage points? Thanks.

I will take the first and third question, and then I will let Mark comment on the earn-out for Harmony. On the iPod market, we saw a softening of the market in general out there, iPod peripherals. Is that long term, short term? It is very hard to say. Is it related to iPhone? Very hard to say, I do not think we have enough information to assume that. I doubt it, frankly. We feel that this could be one of those cycles that happens in these markets. In this particular case, we do not have a particular market development. We participate, we have great products and they are a fraction of our sales. We hope to increase it, but it is not so much on the radar as other things. Your third point was -- I am sorry, I did not -- Michael Foeth - Vontobel: Market share loss in webcams.

The market share loss -- we started the cycle, let’s say, a year ago. We were at the peak of our market share, which was around 60% to 65%. We are now around 50% to 55%. Mark J. Hawkins: The third point, just following up on what Guerrino was asked, is with respect to the Harmony remote; Michael, you are absolutely correct. Actually, you will see that if you look on our balance sheet and the intangible assets, you will see an increase year on year, substantially. That is basically we have accrued an estimate of $34 million for the earn-out, so we are just absolutely delighted with the full picture of the Harmony business and the purchase. You know, the original purchase price we had, plus the earn-out, and you can see the size of the business and the capabilities. You are right to spot that. That is where you will see it in the year-on-year compare at $34 million. That is a preliminary estimate. Without going into too much detail on how it is calculated, there are six quarters that have to be assessed before the final calculation is done but that is the minimum that would be there. Michael Foeth - Vontobel: Great, thanks. Just a last one, if I may. In the OEM business, is there any business related to Sony on the OEM side or is it only keyboards and desktops?

I believe, and I can ask for help from the people in Freemont, I believe it is marginal at this point but that said, with the cycle of PS3 and the other opportunities for OEM in gaming to increase. Mark J. Hawkins: We do have some, to your point, small participation with Sony on the OEM side.

Your next question comes from Tavis McCourt with Morgan Keegan. Tavis McCourt - Morgan Keegan: Hi guys, just a couple of quick follow-ups. Guerrino, you mentioned expecting to get back to double-digit growth in webcams in the second-half of the year. I guess it is a pretty material difference if you are talking about getting back to double-digit growth on top of the Q3 number or the Q4 number. Do you think there is a chance to get back to that level by Q3, or are you talking about double-digit growth on top of the Q4 number you just put up?

That is a very specific question for me. Let me look at my crystal ball here. I believe that if you took Q3 and Q4 combined, you can see double-digit growth over that. Tavis McCourt - Morgan Keegan: That’s helpful. And then in terms of the market share commentary year over year you obviously mentioned, do you think you guys were pretty flattish sequentially or do you think you lost some more market share sequentially in webcams?

No, we did not. We actually were flattish sequentially, so what we did experience in November, which was a bigger loss, we recovered in December and we sustained it. Tavis McCourt - Morgan Keegan: Great. And then my real question relates to Harmony remotes, which I suspect are mostly in North America now. Can you talk about the timing or the strategy of launching those or getting that market more developed in EMEA and APAC?

Yes, let me talk about EMEA which is the biggest growth opportunity we have. We have begun an approach to develop channel competencies for selling Harmony which do not exist as such, and so have taken a little bit longer than in the U.S. Let me give you an example. One of the largest Harmony customers in the U.S. is Best Buy. Best Buy has a phenomenal business which is called the Geek Squad, you have probably heard. The Geek Squad is much of the way Best Buy makes its money, and it is a group of people that come to your place and install and service everything -- very well-received by the American consumer. This kind of capability is not as developed throughout Europe and therefore it is taking time. So we are focusing towards not only the big box retailers in Europe but also to more specialist AV retailers. They are the more natural Harmony channel. We expect to have substantial growth in Europe with Harmony moving forward. Tavis McCourt - Morgan Keegan: Is there any product development that needs to happen for that, or is it really just a distribution issue?

No, it is a distribution and channel development challenge. The product is actually available in multiple languages and you can buy it in Italian and German and French and many more languages now. Tavis McCourt - Morgan Keegan: Thanks very much.

We will take a last question.

Your next question comes from Odon de Laporte with Cheuvreux. Odon de Laporte - Cheuvreux: Thank you very much for taking my question. Most of my questions have already been asked but I was wondering if you consider to be more aggressive in prices under the webcam category. Given the fact that this category has very high margin, don’t you feel that it could affect the margins in the second part of the current fiscal year? Thank you.

There are many things that we will do with webcams, and I cannot and will not be more specific, due to the competitive nature of the information. Let me just make a comment on margins. You have seen us post a substantial margin this quarter, and the highest margin we have ever had in a Q4 in history, in memory. That, in spite of a 32% decline in webcams. So the margin of the portfolio is quite healthy and I believe that even a small erosion in webcam margin, if any, combined with growth will bring us to a substantially, at least an equivalent margin level, if not better, so I would not particularly be worried about that. Odon de Laporte - Cheuvreux: Thank you very much.

Let me close this call. Thank you very much for attending today. As I said at the beginning, this was a banner year for us. We grew in the mid-teens. We added more than $60 million to our net income. Our margins are strong, our balance sheet has never been healthier. Most importantly, we see the opportunity to continue this long-term growth path in the mid-teens in the foreseeable future, thanks to the multiple drivers in the portfolio. As the product categories go up and down quarter after quarter, over the years we have demonstrated a strong ability to develop markets and reaccelerate growth. Just a few examples, we created the webcam category. We created cordlessness for the PC and we transformed a dormant remote control market to what it is today. I am confident that this ability and our results will again play a significant role in the coming quarters and years. With that, thank you for joining us today. Have a good day.

This concludes today’s Logitech fourth quarter fiscal 2007 earnings conference call. You may now disconnect.

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