Videoconferencing equipment maker, Polycom Inc. (PLCM), posted better-than-expected financial results for the first quarter of 2014. This was primarily due to a strong Unified Communications Personal Devices segment which provides hardware and software for real-time communication services such as video conferencing, speech recognition and instant messaging.
GAAP net loss in the first quarter of 2014 was $4 million or a loss of 3 cent per share compared with a net income of $2.6 million or 1 cent per share in the prior-year quarter. However, quarterly adjusted (excluding special items) earnings per share of 15 cents were significantly above the Zacks Consensus Estimate of 8 cents.
Total revenue in the first quarter of 2014 came in at $328.5 million, down 3% year over year and also at par with the Zacks Consensus Estimate. Segment wise, Product revenues were $231 million, down 6.3% year over year. Service revenues were $97 million, up 4.5% over the prior-year quarter.
Technological Distribution of Sales
UC Group Systems revenues totaled $213.4 million, down 8% year over year. UC Personal Devices revenues were $56.5 million, up 15% from the year-ago quarter. UC Platform (Network Infrastructure) revenues came in at $58.7 million, up 3% year over year.
Geographic Distribution of Sales
The Americas (North and South) generated approximately $163.1 million in revenues, down 5% year over year. Europe, the Middle East and Africa recorded $89 million, flat year over year. The Asia-Pacific region accounted for the remaining $76.1 million, down 3% year over year.
Margins
Gross margin in the reported quarter stood at 58.4% compared with 58.8% in the year-ago quarter. Quarterly operating expenses were $198.9 million, down 0.4% year over year.
Balance Sheet
At the end of the first quarter of fiscal 2014, Polycom had nearly $530.1 million of cash and marketable securities on its balance sheet compared with $527.3 million at the end of fiscal 2013. The total debt stood at $240.6 million as against $242.2 million at the end of 2013. The debt-to-capitalization ratio was 0.20 in the first quarter of 2014 as compared with 0.20 at the end of fiscal 2013.
Cash Flow
Cash flow from operations, at the end of first quarter of 2014, was $19.1 million against $49.4 million at the end of fiscal 2013. Free cash flow, during fiscal 2013, was $8.2 million compared with $36.6 in fiscal 2013.
Other Stocks to consider
Polycom currently has a Zacks Rank #3 (Hold). Other stocks worth considering in this sector include Nokia Corp. (NOK), ShoreTel, Inc. (SHOR) and Juniper Networks, Inc. (JNPR). Both Nokia and ShoreTel currently have a Zacks Rank #1 (Strong Buy) while Juniper Networks has a Zacks Rank #2 (Buy).
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