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Polycom Inc. (PLCM - Analyst Report) posted fourth-quarter 2012 adjusted earnings per share (excluding stock-based compensation items) of 4 cents, missing the Zacks Consensus Estimate by a penny.

GAAP net income in the fourth quarter of 2012 was $2.2 million or 1 cent per share compared with a GAAP net income of $49.6 million or 28 cents per share in the prior-year quarter.

Total revenue in the fourth quarter of 2012 was $353 million, down 8.6% year over year, but just above the Zacks Consensus Estimate of $352 million. Segment wise, UC Group Systems revenue was $238.2 million, down 8% year over year. UC Personal Devices revenue was $46.8 million, up 2% year over year. UC Platform (Network Infrastructure) revenue was $68 million, down 15% year over year.

Geographic Distribution of Sales

In the fourth quarter of 2012, America generated approximately $175.2 million of revenue, down 3% year over year. Europe, Middle East and Africa generated $93.4 million, down 10% year over year. Asia-Pacific accounted for the remaining $84.4 million, down 18% year over year.

Margins

Gross margin in the reported quarter was 58.6% compared with 60.6% in the year-ago quarter. Quarterly operating expenses, at $202.3 million, were up 4% year over year. The increase in operating expenses was based on higher office and research and development expenses.

Balance Sheet

At the end of 2012, Polycom had nearly $674.3 million of cash and short-term investments on its balance sheet compared with $534.6 million at the end of 2011. Its balance sheet remained clear of any outstanding debt at the end of 2012.

Cash Flow

Cash flow from operations at the end of 2012 was $187 million, down from $299.6 million at the end of 2011. Free cash flow (cash flow from operation less capital expenditure) was $119.4 million at the end of 2012 down from $230.4 million at the end of 2011.

Other Stocks Set for Earnings Release

Some other companies, which are about to release their financial results in the upcoming days are Microsoft Corporation (MSFT - Analyst Report), which will report its second quarter fiscal 2013 results on Jan 24 while Cisco Systems Inc. (CSCO - Analyst Report) is set to release its second quarter fiscal 2013 results on Feb 13.

Our Take

At present, Polycom remains the only pure play unified collaborative solutions provider. The company stands to gain as enterprises, governments and educational institutions increasingly recognize the productivity-enhancing benefits of video conferencing. The company has already formed a consortium of open video exchange cloud with 14 leading telecom service providers across the world, which we believe will act as catalysts for growth going forward.

Notably, Polycom entered into a strategic agreement with AT&T Inc. (T - Analyst Report), to offer cloud-based video conferencing services which will its position in the immersive Telepresence market, where it has been battling with Cisco for the top position.

Currently, Polycom Inc. carries a Zacks Rank #3 (Hold).

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