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Polycom Shares on the Rise Following Impressive Fourth Quarter
January 21, 2011 | Chris Payatagool
Powered by strong sales of its video conferencing products, Polycom (News - Alert) posted better-than-expected fourth-quarter earnings on Thursday, causing the company's stock to skyrocket in after-hours trading.
For Q4, Polycom reported $340 million in revenue, or 49 cents a share, up 27 percent from the fourth quarter of 2009. Wall Street had anticipated revenue of around $327 million. The company's network systems revenue, which is a crucial part of its thriving unified communications business, was up 25 percent.
"These were very solid results," Gleacher & Co analyst Stephen Patel told Reuters (News - Alert). "Most importantly, the network systems revenue was up -- that is very strategic to future sales."
Investors were quick to jump on Polycom stock soon after the 4Q results were reported on Thursday. The California-based company's shares were up more than 8 percent in after-hours trading. Polycom stock has soared since the third quarter of last year, increasing by more than 30 percent in that time.
On the year, Polycom generated a company record $1.22 billion in revenue, and took home $68.4 million in earnings, according to the Mercury News.
Video conferencing providers like Polycom and Cisco have achieved greater levels of success during the recession as companies are cutting back on their travel budgets. Polycom increased its market share in 2010 by making a few key investments, including inking a partnership agreement with Microsoft (News - Alert) to sell a number of UC products.
"Polycom's tightening strategic partnership with Microsoft is adding to Polycom's street credibility, driving new opportunities the company's way," Jason Ader, an analyst with William Blair & Co. wrote in a recent note to investors.
Moving forward, the collaboration with Microsoft should enable Polycom to better compete with Cisco (News - Alert) in the video conferencing space, he added.
Polycom execs told analysts during a conference call that they anticipate 2011 will bring "significant revenue growth," and "expanding operating margins."
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Beecher Tuttle is a TMCnet contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.
Edited by Tammy Wolf
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