We reaffirm our long-term Neutral recommendation on
). The company's financial results for the second quarter of 2013
outpaced the Zacks Consensus Estimate. We believe that the stock
is currently fairly valued. Polycom carries a Zacks Rank #3
Why Kept at Neutral?
Industry leading unified collaborative solutions of Polycom
has gained solid market traction. The company's state-of-the-art
unified communications technology integrates video conferencing
and instant messaging while enabling data transfer from one
communications platform to another. At present, Polycom remains
the only pure play unified collaborative solutions provider. The
company stands to gain as enterprises, governments, and
educational institutions increasingly recognize the
productivity-enhancing benefits of video conferencing.
Polycom has entered into a strategic agreement with
) to offer cloud-based video conferencing services to different
organizations, which will be accretive to its long-term growth.
The company is 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.
Meanwhile, the uniform collaborative communications market is
fiercely competitive, resulting in an aggressive pricing
Cisco Systems Inc.
) has become the main competitor of Polycom after it purchased
Tandberg TV of Norway. Although sales in the North American
region has stabilized a little, it is yet to reach its previous
run rate. The company is suffering in this region mainly due to
poor execution problems as regards marketing and sales.
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