Polycom Beats Q3 Earnings, Gains on Lower Costs - Analyst Blog

Polycom Inc.(PLCM) posted financial results for the third quarter of 2014, wherein both its top and bottom line surpassed the Zacks Consensus Estimate.  

GAAP net income in the third quarter came in at $17 million or 12 cents per share compared with a loss of $24 million or 14 cents in the prior-year quarter. Also, quarterly adjusted (excluding special items) earnings per share of 15 cents were well above the Zacks Consensus Estimate of 12 cents.

Total revenue in the quarter came in at a little over $335.7 million, down 0.2% year over year and slightly above the Zacks Consensus Estimate of $335 million. Segment wise, Product revenues were $240.1 million, down 1% year over year. Service revenues totaled $95.6 million, up 1.8% over the prior-year quarter.

Technological Distribution of Sales

UC Group Systems revenues totaled $217.3 million, down 2% year over year. UC Personal Devices revenues were $60.1 million, up 6% from the year-ago quarter. UC Platform (Network Infrastructure) revenues came in at $58.3 million, nearly flat year over year.

Geographic Distribution of Sales

The Americas (North and South) generated approximately $166.4 million in revenues, down 6% year over year. Europe, the Middle East and Africa recorded $84 million, up 5% year over year. The Asia-Pacific region accounted for the remaining $85.3 million, up 8% year over year.

Margins

Gross margin in the reported quarter stood at 58.6% compared with 57.9% in the year-ago quarter. Quarterly operating expenses were $177.7 million, down 18.3% year over year. Quarterly operating was $19 million compared with a loss of $22.3 million in the prior-year quarter.

Balance Sheet

At the end of third quarter of fiscal 2014, Polycom had nearly $557.4 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 $237.5 million as against $242.2 million at the end of 2013. The debt-to-capitalization ratio was 0.18 in the third quarter as compared with 0.19 at the end of fiscal 2013.

Cash Flow

Cashflow from operations, at the end of the first nine months of 2014, was $114.6 million against $118.8 million in the year-ago period. Free cash flow, in the reported period was $77.8 million compared with $78.1 million in the same period last year.

Other Stocks to Consider

Polycom currently has a Zacks Rank #3 (Hold). Other better-ranked stocks worth considering in this sector include Qualcomm Inc. (QCOM) Aruba Networks, Inc. (ARUN) and Nokia Corp. (NOK). Qualcomm sports a Zacks Rank #1 (Strong Buy) while the other two currently have a Zacks Rank #2 (Buy).