Polycom gets HP visual collaboration business for $89M, as Hewlett-Packard changes direction

With an eye on squaring off with Cisco (NASDAQ:CSCO) and future market share growth, videoconferencing company Polycom (NASDAQ:PLCM) Wednesday paid $89 million for Hewlett-Packard's (NYSE:HPQ) visual collaboration business, including the Halo products and managed services business.

Polycom expects this acquisition to be slightly accreted to earnings upon closing. The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close in the third quarter of 2011.

Financial terms weren't disclosed, though Polycom said the deal will slightly boost its earnings after the expected close in the third quarter.

As part of the agreement, HP will resell Polycom telepresence and certain video UC solutions; Polycom's video applications also will be available for HP's WebOS platform.

The exclusive partnership broadens Polycom's strategic relationship with HP and expands the UC solutions HP offers its customer base.

"It looks like HP might be pushing away from videoconferencing," James Kelleher, director of research at Argus Research said. "It's partly that [HP CEO] Leo Apotheker really wants to focus on this being a solutions company."

HP's Halo is one of the high-end models available in video conferencing, using large HD screens and high-speed networks. Increasingly, more videoconferencing is taking place at the lower end of the spectrum, on desktops with more reasonably priced systems.

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