Polycom Inc.
(
PLCM
), a leading global unified collaborative solutions provider,
recently reported disappointing preliminary financial results for
its first quarter of 2012. The company reported that total revenue
will be within the range of $364 million - $370 million. Its
mid-point of $367 million is well below the current Zacks Consensus
Estimates of $384 million.
Quarter GAAP EPS will be around 7 cents - 9 cents per share.
Non-GAAP EPS (including share based compensation expenses) will be
13 cents - 15 cents per share. Its mid-point of 14 cents per share
barely meets the current Zacks Consensus Estimate.
Management cited continuation of sales execution problem in the
North American region and sales fluctuations in the Asia-Pacific
region are the primary reason for these poor performance. Just a
week ago, we downgrade our recommendation on Polycom to Neutral
from Outperform, backed by our assessment that the global unified
collaborative solutions market is becoming immensely competitive
day by day and Polycom may yet to fix its sales execution problems
in the North American region. Currently, Polycom holds a Zacks #3
Rank (Hold) on the stock.
At present, major concern for Polycom is its lukewarm
performance in the most important North American regions. The
company is significantly suffering in this region in the last
couple of quarters, mainly due to poor execution problems of
marketing and sales.
Management has done several restructurings, which are yet to
generate fruitful results. The problem seems to be double-edged (1)
growing competitive pressure (2) precipitous macro-economic
fluctuations, resulting in volatile tech spending.
The uniform collaborative communications market is fiercely
competitive, resulting in a cut-throat pricing strategy.
Cisco Systems Inc.
(
CSCO
) became the main competitor of Polycom after it purchased Tandberg
TV of Norway. Cisco itself is a developer of high-end
videoconferencing solutions, mainly comprising custom-designed
digital boardrooms for executives and boards to hold global
meetings. Cisco has acquired privately-held BNI Video, a video
back-office and content-delivery network analytics company, further
enhancing its videoconferencing portfolio.
Besides Cisco, smaller firms are also flexing their muscles.
Logitech International S.A.
(
LOGI
) purchased privately held LifeSize Communications, a developer of
high-end high-definition videoconferencing gear. Logitech also
acquired Italian firm Mirial, a leading videoconferencing solution
provider offering video-calling on tablets and other mobile
handhelds.
Furthermore,
Microsoft Corp.
(
MSFT
) has acquired Skype, a leading developer of free video-calling
software for PCs and other digital devices. The acquisition of
Skype will enable Microsoft to offer videoconferencing from desktop
computers.
CISCO SYSTEMS (
CSCO
): Free Stock Analysis Report
LOGITECH INTL (
LOGI
): Free Stock Analysis Report
MICROSOFT CORP (
MSFT
): Free Stock Analysis Report
POLYCOM INC (
PLCM
): Free Stock Analysis Report
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