Plantronics, Inc. (PLT)

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Plantronics, Inc. (PLT)

F2Q11 (Qtr End 09/30/10) Earnings Call

November 2, 2010 5:00 pm ET


Greg Klaben - VP, IR

Ken Kannappan - President and CEO

Barbara Scherer - SVP Finance and Administration, CFO


John Bright - Avondale Partners LLC

Reik Read - Robert Baird & Co.

Tavis Mccourt - Morgan, Keegan & Company, Inc

Rohit Chopra - Wedbush Securities Inc.

Mike Latimore - Raymond James & Associates



At this time, I would like to welcome everyone to the Q2 fiscal year 2011 conference call. (Operator Instructions)

I will now turn the call over to our host, Mr. Greg Klaben, Vice President of Investor Relations.

Greg Klaben

Thanks Jeremy. Joining me today to discuss our second quarter fiscal 2011 financial results are Ken Kannappan, Plantronics’ President and CEO; and Barbara Scherer, Senior Vice President of Finance and Administration, and CFO.

I’d like to remind you that during the course of today’s conference call, we may make certain forward-looking statements that are subject to risks and uncertainties as outlined in today’s press release.

As we have highlighted before, the risk factors in our press release and SEC filings are not standard boilerplate. We update these risk factors every quarter, adding and dropping language and changing the order, depending upon the timing and potential impact of the concerns that we foresee.

We believe forecasting results of operations is difficult, and we ask you to focus particular attention on these risk factors that could cause actual results to differ materially from those anticipated by any such statements. For further information, please refer to the company’s Forms 10-K, 10-Q, today’s press release, and other SEC filings.

Please note that all financials, metrics and comparisons are stated in terms of continuing operations, which exclude Altec Lansing or the AEG division. The sale of Altec Lansing was effective as of December 1, 2009.

Plantronics second quarter fiscal 2011 net revenues were $158.3 million compared to guidance of $158 million to $163 million. Plantronics GAAP diluted earnings per share were $0.52 in the second quarter compared with $0.32 in the same quarter of the prior year. Non-GAAP diluted earnings per share for the second quarter were $0.58 compared with $0.42 in the prior year quarter and guidance of $0.48 to $0.52.

The difference between GAAP and non-GAAP earnings per share from continuing operations for the second quarter includes stock based compensation charges and purchase accounting amortization, both net of associated tax benefits.

I’d like to remind you that on the Investor Relations section of our website we have an updated PowerPoint presentation, as well as an analyst metric sheet with the financials and metrics released today.

With that, I’ll turn the call over to Ken.

Ken Kannappan

Thank you, Greg, and thanks all of you on the call for taking the time to listen in. As Greg covered, second quarter net revenues were within our guidance range and the quarter was highly profitable, exceeding our operating profit and earnings per share guidance.

This was driven by strong office and contact center revenue, including increased sales of Unified Communications headsets, good margins and low operating expenses. All product categories were at or above our expectations with the exception of mobile Bluetooth, which Barbara will discuss in greater detail.

I’d like to give you my key takeaways for the second quarter.

First, we continue to see strong momentum in Unified Communications. Our UC revenues were $13.3 million compared with $9.8 million in the prior quarter and represent over 10% of our OCC revenue. We believe that we are performing well on all fronts of our Unified Communications strategy, including customer wins, scope and strength of our alliances, net revenues realized and our UC product pipeline.

We’re building alliances throughout the spectrum of UC vendors and system integrators. On the vendor side, Microsoft previewed their next version of UC software called Lync. We expect this next version to increase adoption of UC over the course of 2011. We remain a committed partner to Microsoft and have already certified a number of new UC products for this platform.

We also remain closely partnered with the other major UC platform vendors, including Cisco, Avaya, Alcatel and IBM, and our products are closely integrated with their platforms. Cisco provides a broad opportunity for headsets as they offer multiple hardware and software opportunities. For example, our products are fully integrated with their cell phones, the PC, in addition to their desk phones, and their applications for mobile devices.

The Cisco opportunity extends beyond the PC, and given their significant installed base of over 30 million VoIP phones, there is a sizable opportunity for headset adoption as they provide new UC functionality and applications which extend to new devices. We already have solutions for their CoIP phones and PC devices and believe we have a very good position as their platform evolves.

Second, we continue to invest heavily for the growing UC opportunity. Besides investing in R&D to build a strong product pipeline, our focus on UC is creating an improved infrastructure to drive initiatives throughout the business and to build on our current UC market position. We are creating a strong management team across disciplines.

We recently hired Ingrid Van Den Hoogen, as our Chief Marketing Officer. Ingrid brings over 20 years of marketing at Sun Microsystems. She’s an exceptional marketing professional with a track record of building compelling value propositions for our new IT technology offerings. Earlier this year we hired Pat Wadors as SVP of Human Resources. Pat has 24 years experience, including four of most recently at Yahoo!, bringing world-class HR function to Plantronics.

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