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Polycom's RealPresence Platform to Counter Competition

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On Aug 25, 2014, we issued an updated research report on Polycom, Inc. . The company shows strong signs of improvement as its Unified Communications Personal Devices segment reported solid global growth.
Polycom has delivered positive earnings surprises in two quarters last year, with an average beat of 32.59%. Meanwhile, the company reported disappointing financial results for the second quarter of 2014 with both the top and the bottom line missing the Zacks Consensus Estimate. 
Polycom’s RealPresence platform is gaining considerable popularity. The company supplied 12,500 desktop corporate phones to cloud-based voice over IP in Unified Communications Provider, Jive communication in the reported quarter. 
In the meantime, Polycom is focusing on streamlining its cost structure by reducing headcounts, in order to improve margins, and realigning and reinvesting resources in strategic growth areas. Further, Polycom entered into a strategic agreement with AT&T Inc. (T - Free Report) to offer cloud-based video conferencing services to different organizations. Moreover, Polycom’s newly-launched Group Series video products are gaining significant market traction and have already contributed 43% of the total group video revenue in the reported quarter, highlighting year-over-year growth of 36%.
However, management believes that sales in Europe will remain under pressure in the third quarter of 2014 mainly due to the recent tension between Russia and Ukraine. Adding to the woes, the global economy is currently far below its pre-recession level. This may lead to longer approval cycles for new projects and uncertainties shrouding actual program implementations at customer sites.
Meanwhile, the uniform collaborative communications market is becoming fiercely competitive, resulting in a cut-throat pricing strategy. After the acquisition of Norway’s Tandberg TV, Cisco Systems, Inc. (CSCO - Free Report) has become a major competitor of Polycom. 
Polycom currently carries a Zacks Rank #3 (Hold). Another stock worth considering in this sector is DragonWave Inc. with a Zacks Rank #2 (Buy).

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