Why Plantronics Stock Just Dropped 8%

What happened

Shares of computer headset and desk phone maker Plantronics (NYSE: PLT) are face-planting today — down 8% as of 1:25 p.m. EST on news that the company will not in fact be selling itself to Logitech (NASDAQ: LOGI) .

So what

In twin statements this morning, Logitech informed investors that “it was engaged in discussions with Plantronics regarding a potential transaction. However, those discussions were terminated.”

Logitech says it “does not intend to comment further.” However, Plantronics did, issuing its own press release confirming that “the Company is no longer engaged in discussions with Logitech International S.A. … regarding a potential combination” and adding that this whole merger idea was Logitech’s in the first place: “Logitech approached Plantronics regarding a potential acquisition and, consistent with the Plantronics Board’s fiduciary duties, the Company entered into discussions with Logitech. Those discussions have ended.”

Wilting sunflower.

Without a merger in its future, this “Plant” is wilting. Image source: Getty Images.

Now what

Investors, perhaps hoping they’d be treated to a big premium to market price when Logitech bought out Plantronics, are now feeling sad and disappointed and selling out of Plantronics stock. Plantronics management argues that this is a mistake because Plantronics is “the market leader in Unified Communications with the most comprehensive portfolio of communications and collaborations endpoints, our prospects are outstanding.”

On the other hand, Plantronics is also a company with no GAAP profits and a big debt load. Granted, these are both consequences of the company’s recent purchase of Polycom, as Plantronics management made clear in its recent earnings call . Still, with an enterprise value equal to 26 times trailing free cash flow, I can’t say as I really blame investors for being unenthused now that the prospect of a buyout has been removed.

10 stocks we like better than Logitech International

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and Logitech International wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of November 14, 2018

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.










Zeen is a next generation WordPress theme. It’s powerful, beautifully designed and comes with everything you need to engage your visitors and increase conversions.

Wealth Empire Newsletter
Register now for free updates and alerts

Subscribe By

Note: I have the ability to revoke this permission at any time and ask for the removal of my personal data collected by contacting us or simply clicking Unsubscribe.