Polycom Falls on Sales Miss Amid Turnaround: San Francisco Mover

Polycom Inc. (PLCM), a maker of videoconferencing equipment, declined the most in more than five months after preliminary first-quarter earnings and revenue fell short of analysts’ expectations.

The shares tumbled 20 percent to $14.56 at the close in New York, the biggest drop since Oct. 20. Polycom, based in Pleasanton, California, has fallen 11 percent this year.

Quarterly earnings excluding some items will probably be 21 cents to 23 cents, the company said in a statement today. That compares with the average 30-cent estimate of 17 analysts surveyed by Bloomberg. Revenue will likely be $364 million to $370 million, compared with a $400 million average estimate.

“Polycom announced a pretty big miss,” said Tim Long, an analyst at BMO Capital Markets in New York, in a report today. He lowered his rating to an equivalent of hold from buy. “Investors are concerned about execution and increased competition.”

Chief Executive Officer Andrew Miller has expanded his sales force to step up competition with Cisco Systems Inc. for corporate customers. Cisco’s yearlong management overhaul and streamlined promotional efforts have made it difficult for Polycom to gain more traction with corporations, said Joanna Markis, an analyst with Mizuho Securities USA in New York.

“Developing a channel strategy takes a long time, but this miss tells you they need to restructure the internal organization and reset the bar,” said Markis, who has a neutral rating on the shares, in a telephone interview today. “Cisco’s competitive impact is disconcerting.”

Polycom is scheduled to report full financial results on April 18. In the first quarter last year, the company announced earnings excluding some items of 24 cents and revenue of $344 million.

To contact the reporter on this story: Sarah Frier in New York at sfrier1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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