Polycom Inc. (PLCM) posted financial results for the second quarter of 2014. Both the top and the bottom line fell below the respective Zacks Consensus Estimate. Consequently, the stock price dropped 30 cents (2.35%) to $12.48 in the aftermarket trade on Nasdaq.
GAAP net income in the second quarter of 2014 was $8.6 million or 6 cent per share compared with $5.3 million or 3 cents per share in the prior-year quarter. However, quarterly adjusted (excluding special items) earnings per share stood at 13 cents, a penny short of the Zacks Consensus Estimate.
Total revenue in the second quarter came in at a little over $332 million, down 3.8% year over year and also below the Zacks Consensus Estimate of $340 million. Segment wise, Product revenues were $236.6 million, down 5.9% year over year. Service revenues totaled $95.5 million, up 1.8% over the prior-year quarter.
Technological Distribution of Sales
UC Group Systems revenues totaled $218.5 million, down 6% year over year. UC Personal Devices revenues were $53.6 million, up 5% from the year-ago quarter. UC Platform (Network Infrastructure) revenues came in at $59.9 million, down 2% year over year.
Geographic Distribution of Sales
The Americas (North and South) generated approximately $167.8 million in revenues, down 4% year over year. Europe, the Middle East and Africa recorded $83.1 million, up 4% year over year. The Asia-Pacific region accounted for the remaining $81.1 million, down 10% year over year.
Margins
On a GAAP basis, gross margin in the reported quarter stood at 59.5% compared with 58.4% in the year-ago quarter. Quarterly operating expenses were $183.1 million, down 6.3% year over year. On a GAAP basis, quarterly operating margin came in at 3.7% compared with 1.8% in the prior-year quarter.
Balance Sheet
At the end of second quarter of fiscal 2014, Polycom had nearly $549.5 million of cash and marketable securities on its balance sheet compared with $527.3 million at the end of fiscal 2013. The total debt stood at $245.3 million as against $242.2 million at the end of 2013. The debt-to-capitalization ratio was 0.20 in the second quarter of 2014 as compared with 0.19 at the end of fiscal 2013.
Cash Flow
Cashflow from operations, at the end of the first half of 2014, was $80.6 million against $82.1 million in the year-ago period. Free cash flow, in the reported period was $56.3 million compared with $54.5 million in the year-ago period.
Future Plan
The board of directors of Polycom has authorized a new $200 million share buy-back program.
Other Stocks to consider
Polycom currently has a Zacks Rank #3 (Hold). Other better-ranked stocks worth considering in this sector include Comtech Telecommunications Corp. (CMTL), InterDigital Inc. (IDCC) and Qualcomm Inc. (QCOM). All three stocks currently have a Zacks Rank #1(Strong Buy).
(We are reissuing this article to correct a mistake. The original article, issued Thursday, July 24, 2014, should no longer be relied upon.)
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