Bear Stearns: Plantronics Pressured By Danish Competitor (PLT, LOGI)

In a note to clients, Bear Stearns analysts Andrew Neff and Bill Hand noted developments at Danish telecom hardware firm GN Nord Stor and their implications for Plantronics Inc. (PLT) and Logitech (LOGI). Key excerpt:

GN’s robust growth could continue to pressure PLT. Contrary to PLT, GN Nord Stor (main competitor to PLT) reported strong growth in its office/contact center [OCC] and mobile headset businesses with revenues increasing by 31% and 59% y/y, respectively (vs. PLT’s 14% and 34% growth).

Moreover, GN noted that it did not see any significant pricing pressures in both product segments -- although GN experienced margin contraction in its mobile headset business due to product/channel mix shift. With GN reiterating its 2006 outlook and its commitment to continue the growth through product innovation by leveraging the synergies between its OCC and mobile businesses, we see potential for further margin pressures and lackluster growth for PLT.

In particular, GN noted that it has released its highly anticipated Bluetooth office headset system (9300), which competes with PLT’s new Voyager 510 system. Overall, given GN’s historic pricing actions (sold at a discount to PLT), we see healthy financial performance by GN as a negative for PLT and could continue to lead to margin pressures. Stock impact: negative for PLT; potential positive for LOGI (continued dislocation at PLT's telephony headset business could help LOGI to gain share in the consumer audio segment)

PLT 1-yr chart: