Polycom Delivers in First Quarter – Analyst Blog

Yesterday, after market closed, Polycom Inc. (PLCM) declared its first quarter 2010 financial results. GAAP net income for the first quarter was $5.4 million or 6 cents per share compared with a net income of $8 million or 10 cents per share in the prior-year quarter. However, adjusted (excluding special items) earnings per share (EPS) in the same quarter came to 18 cents, in line with the Zacks Consensus Estimate.

 

Quarterly total revenue of $276.2 million was up 22.5% year-over-year. This was also better than the Zacks Consensus Estimate of $263 million. The increase in revenue was primarily due to a strong demand for Video Solutions products, particularly the high-margin Network Systems products.

 

Quarterly gross margin was 57.7% compared with 56.3% in the year-ago quarter. Operating expenses in the same quarter were $144 million compared with $116.2 million in the prior-year quarter. Quarterly operating margin was 5.6% compared with 4.8% in the year-ago quarter.

 

During the first quarter, the company achieved its 49th quarter of sequential positive cash flow from operations. Cash flow from operations was $20.7 million compared with $26.8 million in the year-ago quarter. Free cash flow (cash flow from operation less capital expenditure) was $3.7 million compared with $18.3 million in the year-ago quarter.

 

At the end of the first quarter 2010, Polycom had nearly $470 million of cash and marketable securities, and no outstanding debt on its balance sheet compared with $467.5 million of cash and marketable securities, and no outstanding debt at the end of the previous year.

 

Quarterly revenues were $146 million, remains up 17.7% year-over-year. This segment continues to generate the bulk (53 %) of quarterly revenue.

 

Voice Communications Solutions Product Line (including applicable Services Revenue): Quarterly revenues were $87 million, up 26.1% year-over-year. This product line generated 31% of total revenue.

 

Network Systems Product Line (including applicable Services Revenue): Quarterly revenues were $43 million, up 34.4% year-over-year. This segment generated 16% of total revenue.

 

 

Polycom has forecast that its second quarter 2010 revenue will grow 4%. Gross margin, on a GAAP basis, is expected to remain flat sequentially. Full fiscal 2010 revenue is expected to grow by high teens compared with the pervious year.

 

The share price of Polycom was down 85 cents (2.7%) to $31.15 in the after market trade in Nasdaq.