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Polycom Q1-2016 Financials

The Wainhouse Research Blog

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on Unified Communications & Collaboration


Polycom Q1-2016 Financials

By: -
20 Apr 2016

Just five days after announcing the Mitel merger agreement, and without advance notice, Polycom released its Q1 financial results.  The good news:  operating margins were healthy and within guidance; earnings per share at 2 cents were within guidance.  More good news:  oh, UC personal revenues were up 0.4% year over year and the Americas are holding steady.  And that’s about it.  On the negative side, as shown in the charts and tables below, negative numbers dominate with infrastructure revenues sinking and the all-important UCGroup struggling in what is now clearly a four year, continuous, monotonic decline.

For the first time in this analyst’s memory, Polycom did not host an earnings call.  Whether because the Mitel call was just last week and the company didn’t want to clog the airwaves, or because they didn’t want to deal with what would surely have been a contentious session, only their hairdresser knows for sure.

Polycom is clearly caught in a market transition that is affecting all the vendors.  Foremost is the shift to cloud, a development that is killing off infrastructure sales for all the vendors.  The cloud boat left the dock a few years ago leaving Polycom nearly high and dry.  The market for room systems has also tilted: immersive telepresence is rather flat and interest in high end conference rooms is being overrun by interest in small huddle rooms with fewer AV complications and less expensive collaboration systems.  The key question for all concerned here is whether increases in volume will offset the decreases in price.  So far, the picture isn’t good.

History will tell whether Polycom was swept aside by an insurmountable market transition (buggy whips to horseless carriages) that the company failed to see, or whether the wounds were self-inflicted.  Right now, however, it appears that Polycom management is cutting costs and managing the P&L with great skill.  If only the top line would improve.