Polycom Inc. (PLCM) declared record-high first-quarter 2011 financial results, surpassing the Zacks Consensus Estimates. Despite facing competitive pressure from Cisco, which acquired Tandberg TV, Polycom's high-margin Network Infrastructure Systems businesses grew 25% year over year in the previous quarter.
Strong momentum in the Network Infrastructure division is a significant positive for Polycom since this division drives overall margins of the company. We believe long-term fundamentals of the videoconferencing industry are compelling. Moreover, the global economy has just started to recover. Business enterprises are restricting their respective travel budgets as a cost control measure.
This makes Polycom's HD telepresence solutions a cost-induced alternative in an increasingly interactive world. Polycom has solid liquidity to deal with its future ventures. We upgrade our recommendation on Polycom to Outperform.
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