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July 15, 2009
Polycom Posts Year-over-Year Decline for Q2, Remains Optimistic
By Telepresence (News - Alert) solutions provider Polycom reported its second quarter earnings Wednesday, which arrive closer to Wall Street expectations than the brighter outlook that was rumored last week.
The Associated Press reported that Jason Ader of William Blair & Co. told clients in a note that Pleasanton, Calif.-based Polycom would post better sales than the previous quarter. The AP said demand for video products improved as businesses allocated more money to information technology budgets. There was also growing demand for the technology from the government sector, the report said.
Yet second quarter 2009 consolidated net revenues were $230.7 million – a nearly 25 percent drop – compared to revenues of $271.6 million for the second quarter of 2008. Non-GAAP net income for the second quarter of 2009 was $24.3 million, or 29 cents per diluted share. This compares to non-GAAP net income of $30.7 million, or 35 cents per diluted share, for the second quarter of 2008. GAAP net income for was $23.4 million, or 28 cents per diluted share, compared to GAAP net income of $32 million, or 36 cents per diluted share, for the same period last year.
In addition to telepresence, Polycom (News - Alert) offers video and voice communications solutions. Voice products, which are more sensitive to the economic downturn, remain weak, Ader said, but “with the macroeconomic environment stabilizing, we are optimistic that this business could be at or near a bottom in the second quarter,” according to the AP.
In fact, Robert Hagerty (News - Alert), Polycom chairman and CEO, pointed out that several of the company’s product lines are already experiencing growth or stabilization.
“We experienced a notable improvement in customer demand across a broad-base of vertical markets within the commercial and public sectors during the second quarter,” Hagerty said. “In fact, our video product lines have already returned to sequential growth, our network systems solutions year-over-year growth rate increased significantly from first quarter levels, and voice communications showed signs of stabilization. We believe this demonstrates that customers are increasingly prioritizing unified collaboration as a means to proactively manage their business, which our solutions deliver through a tangible return on investment and productivity improvements.”
For the six months ended June 30, 2009, net revenues were $456.1 million, compared to $530.5 million for the first six months of 2008. Non-GAAP net income for the period was $46.8 million, or 55 cents per diluted share, compared to $63.4 million, or 71 cents per diluted share, for the first six months of 2008.
Company officials said new product offerings and so-called strategic partnerships will pave the way for growth in the second half of the year.
“Looking forward, I am excited by several important developments that position us for long-term growth,” Hagerty said, citing an upturn in the company’s customer relationships and closer alignment with channel partners, as well as improvements to its network system solutions and strategic partnerships with companies such as Microsoft (News - Alert) and Cisco.
He added, “cloud-based solutions [will] create new opportunities for business-to-business communications through managed service offerings, and we are working closely with the leading global service providers to be at the forefront of these initiatives.”
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Erin Harrison is a Senior Editor with TMC. To read more of her articles, please visit her columnist page.
Edited by Michael Dinan
