Weak Polycom Earnings: Trouble In Video Conferencing Market?
When Polycom, one of the best-known names in video conferencing and telepresence, warned of weak quarterly earnings yesterday, it raised a red flag for The VAR Guy. Has Polycom (NASDAQ: PLCM) hit a temporary bump, or is there a bigger industry issue here involving soft demand for video conferencing and telepresence solutions? Telepresence VARs working with Cisco Systems/Tandberg, (NASDAQ: CSCO), Logitech/LifeSize (NASDAQ: LOGI) and Vu Telepresence should sit up and take notice.
First, let’s not panic. Despite the Polycom earnings warning, revenues are still growing at Polycom. In a prepared statement on April 5, Polycom said: “The Company expects to report net revenues for the quarter ended March 31, 2012, in the range of $364 million to $370 million, compared with net revenues of $344 million in the first quarter of 2011.”
Wall Street was expecting faster growth, and Polycom’s stock has dropped about 20 percent on the news. CEO Andrew Miller said shortfalls in Asia Pacific and North America were the primary reasons behind the lower-than-expected growth figure. The company is expected to announce official, finalized quarterly results figures on April 18.
Others to Watch
In the meantime, The VAR Guy is poking around to see if the overall telepresence and video conferencing markets are experiencing slower growth than anticipated. The answer is difficult to pinpoint for the moment.
- Logitech, owner of LifeSize, won’t announce quarterly results until April 26, 2012.
- Vu TelePresence is closely held by Zenith Infotech, an MSP-centric software and cloud company based in India. Still, Zenith Infotech CEO Akash Saraf spoke highly of the Vu TelePresence opportunity in a call with MSPmentor about two months ago.
- Cisco Systems won’t announce earnings until May 9, 2012, according to EarningsWhispers.com. But Cisco a few days ago announced major enhancements to Jabber (a potential Skype rival) and unveiled its TelePresence TX9000 Series. Cisco Senior Director of Business Development Richard McLeod sounded upbeat during a briefing call in March, though his enthusiasm was product and partner related, rather than any type of earnings hint.
So, The VAR Guy is watching that Polycom earnings warning very closely. Is this a temporary, isolated speed bump in the telepresence and video conferencing markets? Or are there more potholes to come?
Well, Cisco’s Q2’FY12 collaboration revenue sequentially declined over the previous 2 quarters, Q1’FY12 and Q4’FY11:
http://www.bradreese.com/blog/2-9-2012.htm
Cisco’s collaboration revenue reporting category includes the sales of Cisco’s Unified Communications and TelePresence products:
http://www.bradreese.com/images/cisco-product-reporting-11-9-2011.jpg
Sincerely,
Brad Reese
Could it be a decline in interest in premise based solutions and a moving to hosted and cloud based communications? Could it also bea decline in the purchase of hardware phones and webcams as more computers have built in webcams and the movement to using softphones?
Andy,
The VAR Guy met you quote a few times during your guest speaking appearances at MuniWireless conferences. Good to see your insights here. Your points seem on the mark.
-TVG
http://www.avblogzine.com/2012/01/19/clouds-on-the-horizon-will-the-cloud-vaas-kill-commercial-av-integration/
Some things to consider
brad’s remarks have some credibility, although since he’s a gray market reseller of used cisco gear, I’ve never quite gotten his agenda.
Polycom are prone to channel stuffing to meet their quota and this has finally caught up with the company.
[…] Weak Polycom Earnings: Trouble In Video Conferencing Market? […]
AND… stocks down another 5% as
April 18 | Wed Apr 18, 2012 4:18pm EDT
April 18 (Reuters) – Videoconferencing company Polycom Inc posted a 56 percent fall in quarterly profit, hurt by slow growth in North America.
Net income for the quarter was $15 million, or 8 cents per share, compared with $ 34 million, or 19 cents a share, last year.
Revenue rose 7 percent to $367.4 million.