Yesterday, videoconferencing equipment manufacturer
) announced that its board of directors has approved a $400
million share buy-back program of its common stocks. The company
is expected repurchase 20% of its outstanding common shares
through this program. The new capital return program will be
funded through $150 million in cash and $250 million in loan.
For loan financing, Polycom will launch a modified Dutch
auction self-tender offer on Sep 13, 2013 which will expire on
Oct 30, 2013. The price range of these tenders will be $10 to
$11.50 per share. Shareholders will decide how many share to sell
at what price within this price range. Polycom expects to
purchase approximately 23 million shares of its common
outstanding stocks at the mid-point of this price
Polycom's business model is currently undergoing a transition
from hardware-centric to cloud and software-centric. Meanwhile,
Polycom has made several product enhancements for its popular
RealPresence platform. Recently, Polycom entered into a strategic
) to offer cloud-based video conferencing services to different
organizations, which will be accretive for its long-term
Further, Polycomis one of the most vital business partners of
) and provides hardware for Microsoft's video chat and VoIP
software, Lync, which can be used to replace traditional phone
systems. Lync-compatible voice devices have become a major growth
driver for Polycom.
On the other hand, contraction of the U.S. Federal budget,
ongoing global economic volatility and highly competitive market
structure may impede Polycom's future growth.
Cisco Systems Inc.
) is the closest competitor of the company. Polycom currently has
a Zacks Rank #3 (Hold).
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