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Tandberg Q1 profit up, sees less spending

April 23, 2009 | Chris Payatagool

tandberg_160x46px.jpg* Operating profit up 11 pct, lags forecast

* Sees effects of constrained spending

* Revenues grow faster than Polycom's video services unit's

OSLO, April 23 - Norwegian video conferencing systems maker Tandberg lagged forecasts with an 11 percent rise in first-quarter operating profit, and said on Thursday its was seeing effects of constrained spending.

"The video industry did experience prolonged sales cycles and the effect of constrained capex in Q1," Tandberg ASA's Chief Executive, Fredrik Halvorsen, told a presentation.

"Against that, we made no compromises on the balance sheet, we have strong operational control and we have strengthened our competitive position," Halvorsen said.

Operating profit rose to $41 million in the three months to end-March, lagging the average forecast of $43 million in a Reuters poll of 11 analysts whose estimates ranged from $34 million to $47 million.

"As the economic environment continues to be a challenge, the underlying drivers of video conferencing remain in place," Tandberg said in a statement after close of trading on the Oslo bourse.

Tandberg stuck to its policy of not giving financial guidance.

Rival video conferencing products maker Polycom Inc posted a nearly 44 percent drop in quarterly profit on April 15, and forecast lower than expected revenue for the second quarter.

Polycom and Tandberg dominate the video conferencing market, which is expected to grow as companies looking to cut travel costs in a bleak economy choose video conferencing as a cheaper alternative to face-to-face meetings.

Tandberg's first-quarter revenues rose 8 percent to $193 million, lagging analysts' average forecasts of 202 million in a Reuters poll, their estimates ranging from $189 million to $212 million.

Polycom's first-quarter revenue from its video services segment fell 2 percent to $156.4 million.

Tandberg said it sold 16,610 units in the first quarter, up from 15,077 in the same quarter 2008, and higher than the average forecast of 15,929 in the poll.

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