We reaffirm our Neutral recommendation on
) based on its current valuation, which plummeted 55% in the last
year. The company's second quarter of 2012 financial results missed
the Zacks Consensus Estimates. The unified collaborative
solutions market is becoming immensely competitive day by day and
Polycom is yet to fix its sales execution problems in the North
The global macro economy is growing at a very slow pace,
resulting in uneven tech spending. Further, Polycom currently is in
the midst of its transition from hardware-centric to cloud- and
software-centric business model, which is the main reason behind
its sales execution problems. Nevertheless,we believe Polycom's
decision to sale its enterprise handset business will be fruitful
in the long term as the company is slowly disinvesting its non-core
hardware businesses. In our view, Polycom is currently fairly
At present, a major concern for Polycom is its lukewarm
performance in the most important North American regions. The
problem seems to be double-edged (1) growing competitive pressure
(2) precipitous macro-economic fluctuations, resulting in volatile
The uniform collaborative communications market is fiercely
competitive, resulting in a cut-throat pricing strategy.
Cisco Systems Inc.
) became the main competitor of Polycom after it purchased Tandberg
TV of Norway. Tandberg is the undisputed global leader in the
uniform collaborative communications market with around 40% market
share. Cisco itself is a developer of high-end video conferencing
solutions, mainly comprising custom-designed digital boardrooms for
executives and boards to hold global meetings. The merged entity
will definitely be a much bigger player in the industry.
CISCO SYSTEMS (CSCO): Free Stock Analysis
POLYCOM INC (PLCM): Free Stock Analysis Report
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