Plantronics, Inc. (PLT)

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Plantronics, Inc. (PLT)

F3Q2011 (12/31/10) Earnings Conference Call

February 1, 2011 5:00 PM ET


Greg Klaben – VP, IR

Ken Kannappan – President and CEO

Barbara Scherer – SVP, Finance and Administration and CFO


John Bright – Avondale Partners LLC

Tavis McCourt – Morgan Keegan & Co

Rohit Chopra – Wedbush Securities

Mike Latimore – Raymond James & Associates

Gregory Burns – Sidoti & Company

Paul Coster – JP Morgan



Good afternoon. My name is Catherine and I will be your conference operator today. At this time, I would like to welcome everyone to the Q3 Fiscal Year 2011 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. (Operator Instructions)

Thank you. I will now turn the call over to Greg Klaben. Sir, you may begin your conference.

Greg Klaben

Thanks, Catherine. Joining me today to discuss our third 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’ve 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 risks 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’ third quarter fiscal 2011 net revenues were 181.6 million, compared to guidance of 180 to 185 million. Plantronics’ GAAP diluted earnings per share were $0.64 in the third quarter, compared with $0.47 in the same quarter of the prior year.

Non-GAAP diluted earnings per share for the third quarter were $0.66 compared with $0.50 in the prior year quarter, and guidance of $0.55 to $0.60. The difference between GAAP and non-GAAP earnings per share from continuing operations for the third quarter includes stock-based compensation charges, restructuring and other related costs and purchase accounting amortization, all net of associated tax benefits and a tax benefit from expiration of certain statutes of limitations.

I’d like to remind you that on the Investor Relations section website – section of our website; we have an updated PowerPoint presentation as well as an Analyst Metric Sheet with the financials and metrics released today. We’ll also be holding an analyst and investor meeting on May 18 at New York Stock Exchange, please contact me for more information.

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

Ken Kannappan

Thank you, Greg. And thank all of you for taking the time to listen to our call. I’d like to start with the key takeaways for the third quarter. Our third quarter net revenues were within our guidance range and the quarter was highly profitable, meeting the high end of our operating profit and earnings per share objectives. This was achieved through strong office and contact center revenues in all geographies year-over-year including increased sales of Unified Communications’ headsets and continued high product margins.

We believe that the global economic environment continues to improve, particularly in Europe, Latin America and the Asia Pacific regions. Second, we believe that the recent introduction of Microsoft Lync along with advanced platforms from Cisco and Avaya will increase the rate of UC adoption and we are already seeing increased activity among enterprises.

Overall, we continue to see increased levels of UC interest, evaluation and adoption, cross geographies, industries, and throughout all size enterprises. We believe that our competitive win rate remains high. And despite the competitive nature of the market our margin of this product group are better than what we would expect for an early stage market.

We believe the calendar 2011 will be a transformative year for the UC market that will begin to have a meaningful benefit to our revenue and profitability in fiscal 2012. Third, while mobile revenue grew 57% sequentially on a pretty decent seasonal up swing the overall category is down from a year ago.

Furthermore the outlook for the category growth remains weak. However, we remain the market leader in the U.S. and our profitability improved from last quarter and last year. This year, Plantronics is celebrating its 50th year anniversary. And last week we had a major launch event including new products, a new website, a new brand message and an IT tool kit to facilitate UC deployments.

We have a webcast of this event, which is currently available on our website and I encourage you to watch it, if you have time and you haven’t already. Our vision and strategy is to make communications more effective in our brand message is simply smarter communications.

People can communicate in more and better ways than ever before. And unified communications further increases their capabilities and options. With so many ways to communicate, from voice to video to conferencing, so many different ways you could reach someone, so many devices you could use, including the PC, which is still unfamiliar as a phone to many people. The challenge is to make everything you choose to do easy and intuitive.

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