Polycom, Inc. (PLCM), a leading provider of video and audio conferencing equipment and related network infrastructure, intends to purchase Accordent Technologies, Inc., a leading provider of video content management and delivery solutions.
The deal will worth approximately $50 million in cash.
According to the company, this transaction will be recognized in Polycom’s 2012 earnings result. The acquisition will allow Polycom to access 1,200 clients of Accordent, present in the enterprise and public domain.
Accordent’s software division will be incorporated in the Polycom UC Intelligent Core group and will be reported along with Polycom’s Network Infrastructure revenues.
It is expected that this deal with Accordent will increase Polycom’s market share by $500 million. Moreover, it is expected that Polycom’s market share will increase to $1.2 billion at a compounded annual growth rate (CAGR) of 32% per annum.
Polycom has a healthy financial position that may sustain its future ventures. The company is developing video conferencing application for smartphones and netbooks. With the growing popularity of smartphone and tablets, Polycom will have huge growth opportunities going forward.
However, we remain concerned regarding the fiercely competitive nature of the video conferencing industry results in cut-throat pricing strategy and the future business infrastructure spending by enterprises in the European regions. Cisco (CSCO) is the main rival of Polycom, after it purchased Tandberg TV of Norway.
We, thus, maintain our long-term Neutral recommendation forPolycom, Inc. Currently, Polycom, Inc.has a Zacks #3 Rank, implying a short-term Hold rating on the stock.
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