Despite record revenue, shares sink as Polycom misses Q3 estimates

Videoconferencing specialist Polycom (Nasdaq: PLCM) was the latest company to be punished by Wall Street for missing third quarter estimates. The company, which reported record revenues for the quarter, nonetheless saw share prices in late trading decline by double digits.

Polycom reported earnings per share of 26 cents, analysts had expected 27 cents; its revenues for the quarter rose 23 percent to $379 million, short of analysts' consensus of $388.3 million.

The company has met or bettered for nine consecutive quarters prior to these results. In the second quarter, Polycom reported its bottom line doubled, and in the first quarter, it reported a six-fold increase.

CEO Andrew Miller said slowing growth was a result of "lower year-over-year revenue growth in the enterprise customer segment."

He blamed it on a slowing economy and said the company needed to improve its go-to-market execution. Polycom, he said, will improve its enterprise execution by adding resources to the region. The company has named former Cisco (Nasdaq: CSCO) executive Dave Rosario as president for North America.

He added that Polycom did see "significant" revenue growth in emerging geographies and the U.S. federal government.  While revenues in the Americas grew 16 percent, they were up 23 percent in Europe and Middle East and Africa and 41 percent in Asia-Pacific.

During the quarter, Polycom completed its acquisition of HP Visual Collaboration and said during the conference call that it has seen "excellent initial results" from the deal.

It also unveiled a cloud-based software strategy that it believes will bring bringing secure HD video collaboration to an array of business, video, mobile and social networking applications.

"We believe that we are best positioned to capture the network effect of video communications being driven by the demand for real-time collaboration in the workplace and social networks," said Miller.

Polycom also announced a partnership with Jive Software to integrate Polycom HD video into Jive's social business platform.

During the conference call, Polycom said it expects revenue growth to accelerate this quarter and said it expects 5 to 6 percent growth.

For more:
- see this release
- hear a replay of the earnings call here
- see this WSJ article

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