Good day and welcome to the Logitech fourth quarter financial results conference call. At this time, all participants are in a listen-only mode. We will be conducting a question-and-answer session, and instructions will follow at that time. This call is being recorded for replay purposes and may not be reproduced in whole or in part without written authorization from Logitech. I would like to introduce your host for today’s call, Mr. Joe Greenhalgh, Vice President of Investor Relations and Corporate Treasurer at Logitech.

Welcome to the Logitech conference call to discuss the Company’s results for the fourth quarter and full year ended March 31, 2011. The press release, our prepared remarks and slides, and a live webcast of this call, are available online at Logitech.com. As noted in our press release, we have published prepared remarks on our website in advance of this call. Those remarks are intended to serve of place of extended formal comments, and we will not repeat them on this call. During the course of this call we may make forward-looking statements, including forward-looking statements with respect to future operating results that are being made under the Safe Harbor of the Securities Litigation Reform Act of 1995. The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated in the statements. Factors that could cause actual results to differ materially include those set forth in Logitech’s annual report on Form 10-K dated May 27, 2010 and subsequent filings, which are available online on the SEC EDGAR database and in the final paragraph of the press release reporting fourth quarter results available at logitech.com. 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 statement as a result of new developments or otherwise. Joining us today from Zurich is Gerry Quindlen, President and Chief Executive Officer; and here in Freemont is Erik Bardman, Senior Vice President of Finance and Chief Financial Officer. I’d now like to turn the call over to Gerry.

Thanks, Joe. Thanks everyone for joining us today. We realize that it has been frustrating for you to have to wait several weeks since the pre-announcement for a thorough explanation of our Q4 results. We regretted having to single the change and outlook without providing more detail, but we felt it was appropriate to let the market know as soon as possible the impact of what we were seeing, even though we had not yet started the financial close process. Now we know that you have many questions, so I will limit my opening remarks to just a high-level overview of what we reported today, so that Erik Bardman and I may get to those questions. The very disappointing conclusion to the year, which resulted in lower-than-expected full-year sales, operating income and gross margin, was due to weaker-than-anticipated demand in the second half of Q4 for our products and our EMEA retail sales region. The weakness in EMEA was the result of two factors: lower-than-expected demand late in Q4 and poor execution of pricing in channel programs in the region. We understand the factors that led to the shortfall in EMEA, and we are taking steps to address the ones under our control in order to improve our performance. We estimate that it will take up to two quarters to fully implement the necessary changes. Our prepared comments, which are posted on our website, contain additional information on what happened in EMEA, and our action plan for improvement. As disappointed as I with the conclusion for fiscal 2011, there were several full-year highlights. We achieved sales growth of 20% and our operating income nearly doubled. We saw meaningful returns from our strategic investments in our LifeSize video conferencing business and our China initiatives. And we also delivered double-digit growth in…

(Operator Instructions). Your first question comes from the line of Ashish Sinha with Morgan Stanley. Please proceed. Ashish Sinha – Morgan Stanley: Hi. Thank you for taking my questions; just a couple if I may. On your growth expectations for Fiscal ’12, would you talk about some of your expectations for each of the focus segments in the context of the 10% organic revenue growth you’re talking about? So I’m talking about China, LifeSize and Google TV. Is it just China or do you have plans of expanding to other emerging markets in Fiscal ’12? And then LifeSize and Goggle TV, what are some of your growth expectations there? And then secondly, could you talk a bit more about your recent distribution agreement with Zagg, which is probably a first [inaudible] tablet. And in this context, should we be thinking more about the use in the future, and what is the current profit sharing agreement with Zagg on this deal? Thank you.

Sure. This is Gerry. So on the growth, breaking down the growth into the focus segments, I’ll give you some directionals. I’m not going to go into too much detail. But with LifeSize, as you know from our investor day, we shared that we were very bullish on the prospects for LifeSize. We felt that that business, as we looked out over five years, could support a growth rate of 25% or better. I’m very pleased with this first full year that we turned in with LifeSize. I think it was an outstanding performance and I’m very comfortable with those long-term growth expectations. I won’t give you a specific number that we’re targeting for FY’12, but it’s consistent with the long-term model. On Google TV, we’re anticipating Google coming out with a software upgrade in 2011, which will add features and functionality. We think that’s the key. You probably noticed in our remarks that we’ve reduced the price of the review box by $50 to $249. Even with that, - we have what I think are pretty prudent expectations for Google TV in terms of our 2012 growth expectations. We’re not leaning in significantly until we know that we’ve got the user experience right and then we and Goggle and all the partners will expand that to other markets. So I think we’ve got a very prudent assumption for FY’12. On China, you know, we just put in – we just wrapped up a spectacular year in China; our first full year of implementing our China initiative. And as you heard, we more than doubled our business in FY’11. I don’t necessarily expect that growth rate to – I don’t expect it to double every year, but I definitely see us getting traction to our strategy and I see the…

Thank you.

Your next question comes from the line of Paul Coster with JPMorgan. Please proceed. Paul Coster – JPMorgan: Yes, thank you. The first question really is on EMEA. How quickly do you think you can resolve the issues that you’ve experienced over there? And to what extend do you think that the problems that weighed on gross margins in the fourth quarter – can you quantify that too.

Sure, Paul. This is Gerry. I’ll talk – I’ll take the first part about how long, and Erik can talk to the gross margin piece and we can definitely help you understand a little bit about how the impact of the overall company. As we said in both the posted, prepared remarks, and as I alluded to in my opening statement, we’re giving ourselves at least a couple of quarters to implement the changes we think are necessary. I believe those changes will start to fix the issue quickly. I’m not suggesting that everything will be completely addressed by the end of the first two quarters of the year, but I think we will have gone a long way. This is not something I think this is going to drag out throughout FY’12. I think we’ll be able to address most of it pretty quickly, meaning in the first half and I definitely don’t see it dragging on beyond FY’12. So we’re moving quickly to address it and most of the benefit will, I think, occur in the first – in terms of fixing it will occur in the first half of the year. And Erik?

And Paul, to your question about gross margin in Q4, the single biggest factor causing the decline in our gross margin was related to the weak performance in EMEA. And to give you a sense and to dimensionalize that little bit, if you looked at just the EMEA retail sales region and the decline of gross margin in that region, it declined about 1,000 basis points year over year. So it’s by far and away the single biggest factor impacting the total company gross margins for the quarter. Paul Coster – JPMorgan: Okay, and so the…

If I could just add one thing to what Erik said, if EMEA had – if EMEA had hit the plan that we had for Q4, the company gross margin would have essentially been about flat with last year at 35,735 8. So that’s how big of an impact it had on the overall results. Paul Coster – JPMorgan: That’s helpful. Thank you. And then your guidance for the year is 35%. That presumably assume a gradual recovery in the margins from EMEA?

Yes. I mean, that’s exactly to Gerry’s point. As we look out at the first few quarters as we implement the changes and as we get EMEA to much healthier level, that’s going to be a near-term drag on gross margin and it’s factored into our guidance for FY’12. Paul Coster – JPMorgan: Okay, quick question on Unified Communications. Do you see a catalyst there? Once this business starts kicking in, how are you going to define it? Is it going to be a separate category or is it going to be folded into, for instance, audio?

Well, if you will, Paul, let me talk a little bit about – UC has really gotten a lot of traction inside the company in a fairly short period of time. As LifeSize became a bigger part of Logitech, we found more and more customers – as you know – let me back up. As you know, Unified Communications is really about bring voice and video together with [inaudible] and chat. As LifeSize became a bigger part of Logitech, we found more and more companies approaching us, feeling us out on – you know, we’re very interested in UC, we’d really like to deal with a single company. We don’t want to get headsets from one player and conference room end sets from another player, desktop solutions with webcams from somebody else. You guys seem like the one player that has it all. And we said, that’s right. And so we’re getting more and more interest and we’re getting more and more traction in terms of working with outside firms. So I think you’re going to see a lot of announcements from us, we’ve already made a couple, in the course of the next six months where we are doing more partnerships to raise UC. Erik, I don’t know if you want to add any comments on Paul’s question about how we’ll report UC going forward? I don’t know if we’ve worked it out.

We’ll have to clarify that in time. I think post some of the announcements in the market and as we talk to you more about that, we’ll give you more clarity as to how to evaluate it and metrics we’ll provide. Paul Coster – JPMorgan: Got it. Last question. Are there any catalyst ahead for Google TV? Can you see points or anything that’s going to happen this year that might promote the use of the review product?

I think the main thing is, just to repeat what I said relative to Ashish’s question, you know, we did lower the price and I think that will only help; $50 to $249. And you know, you can imagine we’ll be promoting – with an everyday price of $249, we’ll be promoting at $199 and it makes the product even more attractive. So I think that will be a catalyst on its own. But the most important catalyst with Google is planning to update the software in 2011. You know, they’re focused on that. That will be key in terms of new features and functionality, a new user interface and just enhancing the user experience. I think that is the single most important catalyst and they’re still very focused on that. Paul Coster – JPMorgan: Thank you.

Your next question comes from the line of Andreas Mueller with ZKB. Please proceed. Andreas Mueller – ZKB: Yes, do you hear me?

Yes. Andreas Mueller – ZKB: Okay, thank you. I was wondering what was distinctively different in the pricing channel management programs in EMEA, where let’s just say [inaudible] during the 2009 recession in other regions? What was the distinction that this didn’t really work to identify basically consumer trends?

So, Andreas, I’ll take a crack at that and, Erik, if you want to add anything at the end, you can. Just let me level set just by reminding you that it was really both a weakening of demand and some – I’d call it a perfect storm of softening demand and some poor and ineffective execution. We responded to the weakening demand we saw particularly starting in February by trying to promote to both the retailer and the consumer, drive more business, that’s the right thing to do. But I would define it as ineffective because it didn’t drive the results we wanted. It wound up lowering price. You heard about the impact that had on margin, but it didn’t really drive any additional business. So it was ineffective. It wasn’t the wrong thing to do, but it was ineffective. In addition to that, we have been trying to change our channel program starting a few months ago to improve the visibility and to frankly change the incentives for our channel partners, to incent them more on – to drive sell-out and consumer pull, and to incent them less on when they purchase from us. And we referred to that in the script, if you had a chance to read it. But we had poor execution on that. We had a lot of complexity. I think we went too broadly and too fast in some cases and that poor execution happened at the worst possible time when demand was weakening. On top of that, we had other execution issues on a spotty basis where we lost market share in several countries and in several customers and I would lump that under poor or ineffective execution. So we really had a perfect storm of weakening demand and these various elements of ineffective or weak execution and all together, you know, resulted in double-digit decline and our gross margins really crashing.

I think Gerry captures it well. I think the other aspect is that we had a relatively back-end loaded quarter in our EMEA retail region, and as Gerry talked about it, as we saw a weakening demand in the middle of the quarter, particularly towards the end in the month of March, and if you have a back-end loaded nature that has an impact. And as he talked about, when you run a promotion, you obviously have an impact on your topline and on your bottom line profitability but if you don’t get the pull through on sales, if you don’t get the lift with the consumer, it has an exponentially bigger impact on your bottom line and that’s what we did see in EMEA in Q4 and it’s a combination of the weak demand and poor regional execution. Andreas Mueller – ZKB: Okay, thank you. And then question on LifeSize. Where are operating margins right now relative to the group? Are they around the 6% you made in 2011 already or has that already exceeded the group average for LifeSize?

So just to give you a sense, Andreas, on LifeSize, a couple of things. One, we’re very happy with how they performed just over the first year of the joint partnership with Logitech. From a profitability standpoint, we’re not providing specific profitability numbers on LifeSize moving forward, but what I would say is that they’re exactly on track with where we want them to be on a growth perspective. Our focus is really investing in their business and helping to continue to drive growth. You heard Gerry talk a little bit about the powerful things that they’re doing that is not only in video conferencing but things that relate to Unified Communications as well. So we’re very excited about LifeSize more than meeting our expectations, both from a growth and a profitability standpoint. Andreas Mueller – ZKB: Okay. Thank you very much.

Your next question comes from the line of Michael Foeth with Vontobel Group. Please proceed. Michael Foeth – Vontobel Group: Yes, hi, gentlemen. Two questions from my side. The first one, regarding basically your mid-term targets, your guidance doesn’t really imply significant leverage as suggested by your mid-term targets and I was wondering how committed you still are to reaching that 13 to 15% operating margin over time? That would be the first question. And also, basically, the other metrics would be the mid-teens growth. And the second question would be, you said that you’re realigning resources to detect the problems that you’ve seen. I was wondering which position or positions in the EMEA management have you actually replaced and what kind of control do you, from top management, have on these channel programs and the pricing policies, and how fast can you react from top management?

Okay, so Michael, a lot of questions here. Let me take the business model question and the realigning of responsibilities in Europe and Erik, you can chime in on the controls. In terms of the business model, we remain committed to what we shared in November. And you correctly point out that we reiterated that we see ourselves as a mid-teens growth company. We also said we believe we’re going to get there, get to those mid-teens growth goals in a very different way. We also reiterated something we always say about our long-term model, which is not an annual target, it’s what we’re managing to over the long run. So even though we’re talking about 10% in FY’12, that’s partially due to the fact that EMEA is going to be a bit of a drag, at least for the first half. But also if I look at ’11 and ’12 together, you’re looking at about 15% on average and so we’re still committed to that. If I look at the other elements of the business model, we said that we felt that we could become a more profitable company over time and we raised our long-term targets on gross margin and, as you know, operating margin. And the main reason we said that was because we were feeling very – and we still feel very bullish about LifeSize. I would say we feel even more bullish after this excellent first year we’ve had, which I think exceeded even our own expectations. And we said that LifeSize should be and will be very accretive both gross margin and operating margin in time as they scale the business. And even with this unfortunate Q4 disruption, I would say that is even more true given the excellent first year that they had. So we don’t see that that has been undermined at all by the unfortunate Q4 results. Relative to – we replaced the head of Europe sales and marketing. That has already happened. There’s a new sales leaders who’s already in place. And the other thing we were talking about is realigning resources had more to do with as we look at PC peripherals in mature markets, which drove a lot of our growth over the last 5 to 10 years, we do not see that driving a lot of our growth going forward. We’re realigning a number of our financial resources and investment resources to emerging markets, to LifeSize, to Digital [inaudible], Unified Communications because we see bigger growth opportunities there because that’s where we’ll get the scaling of our operating expense overtime. So that’s what we meant when we talked about realigning resources. Erick, I’ll let you talk about the controls question.

So Michael, let’s talk a little bit about your question around controls. First and foremost as a company, we’re always looking very closely at the controls and procedures we’ve got in place in all of our operating units around the world. And we’re working very closely with the EMEA regional management team to make sure we’ve got the right controls and processes in place here and you always want to learn from situations like this to make sure what we could different operationally in those types of things. To your question about what do we handle at the headquarters’ level versus what we handle at the regional level, we have a framework in place for every one of our operating regions in terms of the programs that they run and what they operate within. And what I would say here, this is not a breakdown of controls that occurred in the quarter. What we give our regions is they have certain regional levels that they can pull, as Gerry talked about when you manage a channel program or you manage a pricing program, you’re working very closely with your customer, you’re trying to respond to competitive situations, you’re trying to make sure you’re creating pull through to your consumers, etcetera. But what we did have is we had core execution on some of these newer programs that clouded some of our visibility, complicated some things for our customers. And then on top of it we had dramatically weakening demand, particularly in the second half of the quarter that really exasperated a poor execution situation and led to the poor performance we had in the quarter. Michael Foeth – Vontobel Group: Great. Thank you very much.

Your next question comes from the line of Andy Hargreaves with Pacific Crest Securities. Please proceed. Andy Hargreaves – Pacific Crest Securities: Thanks. I just want to ask about the PC peripherals executions and how much of that is driven by further expectations for PC sales versus your expectations for [inaudible] going forward?

Well, I’d say, the assumption, Andy, kind of breaks or incorporates both of those. So you know, as we look at the highly-penetrated markets and mature markets as we’ve been calling them, and we look at some of the developments, there’s obviously much more focus – you know, there’s a lot of emphasis on tablets right now and you know, we’re trying to be prudent in our planning. So we made the assumption that we’re not going to see growth, we’re not going to quantify what would be the rate of decline as we model, but we’re making the assumption that we’re not going to see growth in FY’12 and we’re using that to force a redeployment of resources to the other areas where we do see growth coming from. So we say it’s sort of factors in both the [inaudible] and the underlying PC sales. Andy Hargreaves – Pacific Crest Securities: Okay, and then on the Zagg deal, I don’t expect you to comment on the financials obviously, but can you comment – is this just like for this specific product or is there an ongoing relationship here where you guys are going to co-develop further products as well?

Yeah, I mean, for now it’s just product, but I think Zagg was obviously very, very attracted to the ability to get expanded distribution from Logitech. We were looking, you know, one of the [inaudible] peripheral consumer needs that comes out very strongly is the need for protection and they had this wonderful product that combines an input device with protection in a very elegant solution. And we’ve got our own excellent keyboard products coming out that we’ve developed, but this was a great addition to our lineup and it brings a more comprehensive set of tablet peripherals from Logitech and retailers were thrilled that we were doing this. So we’re kind of looking at this as let’s see where this goes. And as I said, if it works for both of us, I think we’re both going to look for other ways to partner. And we’re looking at ways to partner with other companies because as I said in response to Ashish’s question, you know, I think speed is more important than anything right now. It’s a brand new category, retailers are resetting their shelves quickly, no one quite knows how consumers are going to respond and we want to have the broadest possible offering. So speed is of the essence. And so as I said, we’ll see where it goes. Andy Hargreaves – Pacific Crest Securities: Okay. And then just last on the inventory side, it’s a little high for this time of the year. Are you just comfortable with the aging there?

Yes, so Andy, to talk about inventory a little bit, it was up on a year-over-year basis, I think to your point. And I’m not going to break up the exact numbers, but the most significant factor driving our increase in inventory year over year was the Google TV-related inventory. And it’s, you know, primarily for the reason that there wasn’t any in the year-ago prior period. You know, to your point about aging, we feel comfortable with the aging. It’s something that we look at pretty actively every quarter and we’ll continue to monitor going forward, but the single biggest factor, again, was related to having Google TV inventory in this year and not in the prior year. Andy Hargreaves – Pacific Crest Securities: Okay, thank you.

Your next question comes from the line of John Bright with Avondale Partners. Please proceed. John Bright – Avondale Partners: Thank you. Gerry, Erik, what assumptions are you making in the – for PC industry growth for your FY’12 guidance?

John, it really is regional. You know, for emerging markets – and we are using as our guideline, you know, the third-party data that I think everybody looks at. We add to that some of our own research, but we obviously look at what some of the experts say. And for emerging markets, you know, we expect that we’re going to see very, very healthy growth, continuing to trend as past years in what I’ve been calling the more mature, highly-penetrated markets. It’s a much – it’s in line – let me just say it’s in line with the publically available data from [inaudible] sources. It’s very much in line with that. John Bright – Avondale Partners: For the emerging markets, specifically China, you talked about being able to maintain your gross margins in China and you talked about doing that by manufacturing or assembling the products for the particular market. Given that you’re already assembling in China for the other markets, and it’s a stereotypical price-sensitive market, what are doing to accomplish that?

Well, I think the main things that help us vis-à-vis competition are our brand, which we’ve been in China from a physical presence standpoint for a long time. We’ve been there with a manufacturing presence since the mid-90s and we have a very strong brand in China and that allows you to price a little bit better than competition. And we had a good – as I said several times, we had a good business in China before, meaning we had a sizable business and now we seem to be on a growth trajectory that’s making it bigger much faster and it’s giving us volume and scale benefits. I think, you know, it’s only going to help margins or give us more flexibility against competition. So I think if you look at our continuous rate of innovation, we’re constantly changing over products and moving to the next one before someone’s had a chance to copy our old one, if you look at the strength of our brand, which is only getting better, and if you look at our rapidly building scale, we’re – it allows us to [inaudible]. John Bright – Avondale Partners: Okay.

And just to add to what Gerry said, and you even mentioned it, John, is we’ve talked about increasingly designing products uniquely for the Chinese market. Not only because it appeals well to Chinese consumers, but also because when you do that from the very initial idea phase of a product, you’re able to engineer it for the right price point in that particular market. Because remember, there is not a correlation between low ASPs and low gross margin for us. We’re able to achieve very nice gross margins at different ASPs across the spectrum and we continue to be able to do that in China and we see a path of being able to do that as we grow in other emerging markets. John Bright – Avondale Partners: Next question. On Unified Communications, I assume the products we’re talking about are video products, speaker products and headset products. Headset products would be – actually, you put an announcement I think like late last year, the beginning portion of this year on headset products. The two main headset players, Plantronics and GN talked about certification with the likes of Cisco and Microsoft as being very important. Have you achieved certification with the Cisco and Microsofts of the world for headsets?

I would say – let me just add one thing to your opening statement. I think the key products are certainly audio headsets, some sort of desktop solution, which is typically going to be a webcam, we have a lot of people coming to use for that and we get a lot of people wanting a video endpoint solution, the end – the refrain we hear constantly is we don’t want to buy these from two different players. So I think that’s one of the reasons we’re getting a lot more people knocking on our doors because they see we have all three and obviously they know Logitech quite well. Your other question, absolutely certification is key. We do have certified products. We have certified headset and you’ll actually see a lot of additional announcements in the coming weeks and months around that. So you’re absolutely right and we have some and we will have more. John Bright – Avondale Partners: Well, thank you first for the prepared remarks in advance leaving more room for Q&A. That was very helpful. Thanks.

(Operator Instructions). Your next question comes from the line of Yair Reiner with Oppenheimer & Co. Please proceed. Yair Reiner – Oppenheimer & Co.: Yes, thank you. Question about the EMEA. There’s a pretty big delta in the quarter between selling to the channel, which was quite weak, and sell through, which was pretty much flat year on year. It suggests that you work down some channel inventory, but I guess the guidance suggests that maybe there’s still some more channel inventory to work down. Is that the right way to look at it and to what extent is this price protection a part of your expectations for weaker gross margin in the first quarters?

Yes, so let me give you a little bit of a sense of that, a way to think about it. If you go back and look at from the end of Q3 to the end of Q4 in our EMEA retail sales region, our channel inventory came down about 11%. However, one of the biggest drivers for that was, quite frankly, as you know with the seasonality of our business, our first quarter of the year is by far and away our lowest volume quarter of the year. So we would expect to have the channel down. Now, because we saw such a dramatic slowdown in sell through, and to give you a sense as to how much, it obviously came in at minus 1%. The first three quarters of FY’11 in the region, we averaged about 20% year-over-year sell through growth. So then when you go from that to run rate, that’s the expectation we started out the quarter with. We had pretty healthy consumer demand. You had a dramatic drop off in the minus 1 over the course of the quarter and you heard us talk about not only did it happen during the quarter, but it especially occurred as we got into February and into the second half of the quarter. So when we’re looking at inventory in this particular sense with channel, we’ve got a forward-looking lease on hand estimate that always has an estimate around what type of sell through you anticipate going forward. So given those variables, we ended the quarter with more channel inventory than what’s healthy given the dramatic slowdown in consumer demand. So that’s why we’ve been talking about it will take us a few quarters to work through that with our partners and get back to a more healthy level. So it’s partly related to what happened and also factoring in the seasonality that we have in our business. Yair Reiner – Oppenheimer & Co.: Okay, that makes sense. Very helpful. A question on the remotes business. It looks like excluding Google TV, remotes were a bit down year over year. Any updated thoughts out the prospects for the remotes business and how we should think about that moving forward?

Sure. Go ahead Erik.

From an expectation or what we factored in, is you know, as we’re looking forward in FY’12, we feel very good about the remote franchise. We’ve got some very nice products that you’re going to be seeing from us over the next few months and that’s all factored into our FY’12 guidance as we look forward. Yair Reiner – Oppenheimer & Co.: Okay, and then just one quick one if I may. For products like the Zagg deal, should profitability and gross margin on those types of products be closer to the retail products or OEM products?

I would say it’s not an easy question to answer because each one of these things is unique. I’m not trying to be evasive, it’s just not – it doesn’t lend itself to an easy answer. It’s not OEM margins, but it depends on the nature of the product and what kind of deal we have. I mean, the deal with Zagg is a global distribution deal for them so they’re getting a lot of value added. So each one of these deals is a little bit different and I wouldn’t tell you that even if – it’s not appropriate for us to share the details of that, but these things are all unique. The other comment I wanted to make was building on your last question, which Erik answered. The main thing in our remotes business in Q4 was the weakness in Europe. I think we were down 31% or something like that. We can check that number and make sure that’s the accurate number, but Europe dragged down everything else. Our units were still up with Europe being weak, but Europe was down like 31% and that dragged everything else down. But we had a record year in Harmony. I believe we were up about 45% so I still feel very good about the franchise and still expect big things from it. Yair Reiner – Oppenheimer & Co.: Thank you.

Your next question comes from the line of Nicolas von Stackelberg with Macquarie. Please proceed.

Yes, thanks for taking my question. My question is about the share buyback program that you had approved, I think two year back, 250 million. You haven’t bought back any stock all of last year. While we look at your cash flow statement, you actually had a cash in related to sale from exercises over last year, 46.5 million if you include the excess tax effect. And we also see that you’re share count is starting to tick up. What are the prospects here? You’ve now given guidance that – while it may not exactly match your mid-term targets, but what has to change for you to come back to the market and buy stock? Thank you?

Yes, so Nicolas, to give a little bit of sense and to answer your question, you know, our priorities, and we’ve talked about them and actually we spent some time talking about this [inaudible] back in November, our priorities when it comes to utilization of cash, first and foremost for the business is about making sure we’re adequately funding the working capital of the business. And we’re going after the growth opportunities and particularly some of the things that Gerry’s been talking about with opportunities in emerging markets, LifeSize, things in China, some other places. So we’re absolutely focused on that being the first priority for where our cash goes. We further dimensionalized a little bit that we think the appropriate range of cash to have available to run the business effectively and go after growth opportunities is to have between 15 to 20% of our trailing 12-month sales as a cash balance. And we’re essentially there today with the cash balance. I think we ended the quarter at about 478 million. Beyond that, as we get the cash levels above that level, we’re opportunistically looking at two things, and they’re equal in terms of how we think about them. It is obviously, what you mentioned, the opportunity to go back into the market and repurchase shares. We do have the approved program of $250 million that’s there for us to take advantage of when we choose to do so. And then the other piece is to continue to be opportunistic when it comes to M&A. So no change from our overall strategy and philosophy, but we’re very focused, first and foremost in making sure that we’re adequately funding the business and then we’ll look at those two other opportunities beyond that.

Okay. And then another inventory-related question if I may. Your prepared remarks contain a hint that the most significant factor year over year in the increase was Google TV related inventory. Sales, I think were 6 million, if that’s correct. Can you share with us an absolute dollar amount in your inventory that is related to this product category. And as and when Google does update the software, would that have any bearing on your product configuration?

Two things; consistent with how we’ve always approached it, we won’t disclose any individual product line inventory levels. But it is absolutely true that the single biggest factor in driving our inventory up on a year-over-year basis was the Google TV related product inventory and simply because it wasn’t in a prior year period. To come to the second part of your question, you know, does changes of the software platform by Google TV impact us? Actually, that’s one of the very nice design things about the reviews that [inaudible]. Is that if you bought yours, the very first one we sold, or if you buy it two or three months from now, the hardware does not have to change at all for the consumer to receive the benefits of the new software. Those are free over-the-air software updates that are pushed to the device. And also for us, it creates very minimal obsolescence rates as it relates to the hardware box.

Okay, so you would excluded that you may have to take an inventory write-down on the product that you currently have in stock, specifically in that category?

I’m not going to comment specifically on that type of speculation because at any point in time looking forward, there’s lots of variable factors to go into a product, whether you’d have to make adjustments. But there’s nothing different or unique here as to all the products that we manage in our channel. And actually, I think that the obsolescence risk is, as I mentioned, a little bit lower than it is in certain other types of hardware just simply because the way in which new value’s delivered through the software updates.

Got it. Thank you.

Your next question comes from the line of Michael Studer with Bellevue. Please proceed. Michael Studer – Bank am Bellevue: Yes, I have one question on your guidance for sales. Do you expect a return to the usual seasonality for the full year ’11-’12 and also how was the start in Q1?

In terms – I’ll take the first part and Gerry can add any additional comments if he wants. From a sales perspective on a FY’12, we would expect that the seasonality would be relatively normal. You know, obviously having the EMEA region start out the year weak does create some slight different comparables for us, but I would say overall in the year, it should look like our normal seasonality. Michael Studer – Bank am Bellevue: And on the Q1?

We’re not in a position to comment specifically on the quarter. We’re just a couple of weeks in, but as we said, and Gerry talked about it and it was in our prepared remarks as well, we’re very focused on a couple of things as we come into the quarter. First and foremost is getting the EMEA region back to a healthier level. We know that there’s certain things that we’re putting in place right away in terms of some of the things that we want to change, but we also know that to work through with our partners on channel inventory and those things could take up to a couple of quarters to accomplish. So we’re very focused on that. We’re very focused on the growth opportunities that we talked about; that we would be scaling in LifeSize, the opportunities in China, other emerging markets, we’re very excited about the tablet roadmap that we have in front of us. So those are our priorities right now. And obviously, you know, we’re keeping our eyes very closely tuned to consumer demand levels. I would point out that as we look forward into our guidance, there’s nothing there that assumes any dramatic pickup in consumer demand in the near region. That’s something that we’re going to watch very closely. Michael Studer – Bank am Bellevue: All right. Thanks.

(Operator Instructions). Your next question comes from the line of Mr. Chris Gretler with Credit Suisse. Please proceed. Chris Gretler – Credit Suisse: Yes, thank you. Good afternoon, or good morning. I have a few questions with respect to your OEM business. Now, I was a bit surprised by the reduction in sales on a sequential basis. Basically, do you expect this to continue given the general weakness in the PC market? That would be my first question. Then secondly, I was a bit surprised, I mean, given your remarks about promotional activities and [inaudible]. Those did not work out as expected. What exactly did not work out relative to your original expectations? That would be my second question. And the last one is one [inaudible] investment Europe. There’s quite a mix there generally if you look around. Is there any [inaudible] in particular or is that across the board?

Okay, thank you, Chris. The first question on OEM, I would say that, you know, with OEM, we would say that a lot of the weakness was just a slowdown in future shipments. It is primarily tied to mice and those mice are tied to desktop proportionality, secondarily keyboards. So it’s going to tie and track closely to PC shipments. It’s a piece of our business that does track the most closely to how PC shipments go. Our plan – we’re not going to give you the specific number, but our planning assumption for FY’12, you know, really tracks to – back to John’s questions, tracks to really what the kind of the PC market looks like and what the experts, the outside experts are saying is going to happen. So I think we have a pretty prudent assumption there. We’re not forecasting a major deterioration, but we’re not – we don’t have an aggressive assumption there at all in OEM. On Europe, I mean, I would really repeat what I said to one of the earlier questions. It was essentially a perfect storm of not just promotions, but weakening demand, ineffective promotions, they didn’t stimulate the demand we were looking for so the only effect they really had was to hurt profitability and margins. We did have some poor execution of some new pricing programs that I talked about and then I also talked about market share loses, which I also lump in under poor-ineffective execution. In terms of the countries, I would say it was really all of Western Europe, including for the first time all year, Germany. Germany’s been performing well for us up until now and the factors in Germany were multiple. It wasn’t one thing. Some of it was competition, some of it was some signals from our retailers of weakening demand and it was other factors. But the Nordics performed well and the emerging markets of Europe performed well, they’ve performed well all year. Other than Nordics and emerging markets, all of the other countries, Southern Europe, of course, Germany, - they were all pretty similar and pretty weak. Chris Gretler – Credit Suisse: Okay. Thank you.

Thank you, Chris.

And the last question comes from the line of Beat Keiser with Cheuvreux. Please proceed.

Hi, good morning. One question from my side, please. On the marketing and selling expenses as percentage of sales, I think clearly those were a level we haven’t seen for quite some time. Where there any factors in there that we should expect to go away? And then on the trend of that in FY’12, should we expect those to trend up further more in the first of the year and then gradually decline in the second? Thanks.

Let me start and the Erik can comment a little bit on the Q4 specifics. Let me talk more about the trend and how we’re thinking about if for FY’12 going forward. I do want to take you back to what we said a year ago as we were looking at FY’11. We were coming out of six quarters of contracting revenue and we made it clear that our top priorities of the company was getting back to double-digit growth, that we’re executing against a different strategy, a new strategy with some new areas where we felt the growth would come from, and that we were going to invest to generate that. So we did invest heavily, not only in sales and marketing for the full year, but also in R&D. And obviously we invested heavily in LifeSize. If you look at the guidance for FY’12 and what it implies for operating expense, what we’re saying is that operating expense will grow at the low single digits, in the 4 to 5 range. We’ve also been saying consistently in both our prepared remarks and on this call that we’re very focused on realigning resources, which is moving them from being against things that either aren’t going to grow or going to shrink to areas where we believe we will get healthy growth rates going forward. Within the 4 to 5 percent that’s implied in FY’12, there’s a lot of moving parts; things growing very quickly, like LifeSize in China, and things shrinking. So behind the 4 to 5%, you can’t see all the moving parts but that’s the broader, that’s the broader focus that we have – because we are committed to rebuilding operating leverage. And you know, we took a couple steps back with the disappointment in Q4, but we’re still very committed to rebuilding that and the key to that is going to be getting more disciplined about this redeployment, the resources with our investment envelope. Erik, I’ll let you talk about the specifics of the sales and marketing in Q4.

Sure. And to give you a sense, in Q4 there were a couple of drivers as to why sales and marketing makes sense the way that it was. First and foremost it was advertising related to our Harmony line of remote controls as well as Logitech Revue. But then also, and you heard Gerry talk about it, it was also in our prepared comments, we continue to invest in building out our sales teams and sales capabilities for the growth opportunities in China as well as in the LifeSize business. We want to make sure that we are absolutely maximizing the growth opportunity there. Those were the big drivers of the year-over-year increases in Q4. Beat Keiser – Cheuvreux: Okay, that’s helpful. Thanks.

That concludes our conference call for today. You may all disconnect. Thank you and have a good day.