Polycom Earnings Preview

Investors braced for a bumpy ride ahead of Polycom's (Nasdaq: PLCM  ) earnings announcement. The company has wavered between beating and falling short of analyst predictions during the past fiscal year. The company will unveil its latest earnings on Thursday, July 21. Polycom is a global provider of high-quality, easy-to-use communications solutions that enable enterprise, government, education and health care customers to more effectively collaborate over distance, time zones and organizational boundaries.

What analysts say:

• Buy, sell, or hold?: Analysts strongly back Polycom, with 10 of 17 rating it a buy and the remainder rating it a hold. Analysts like Polycom better than competitor Motorola overall. While analysts still rate the stock a moderate buy, they are a little more optimistic about it than they were three months ago.
• Revenue forecasts: On average, analysts predict $362.9 million in revenue this quarter. That would represent a rise of 23.2% from the year-ago quarter.
• Wall Street earnings expectations: The average analyst estimate is earnings of $0.20 per share. Estimates range from $0.18 to $0.22 cents.

What our community says:
CAPS All Stars are solidly backing the stock with 91.7% assigning it an "outperform" rating. The community at large concurs with the All Stars with 90.4% giving it a rating of "outperform." Fools are keen on Polycom, though the message boards have been quiet lately with only 83 posts in the past 30 days. Polycom's bearish CAPS rating of two out of five stars falls short of the Fool community sentiment.

Management:
Polycom's profit has risen year over year by an average of more than twofold. The company raised its gross margin by 2.1 percentage points in the last quarter. Revenue rose 24.6% while cost of sales rose 18.5% to $138.4 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter	Q1	Q4	Q3	Q2
Gross Margin	59.8%	59.8%	59.3%	58%
Operating Margin	10.5%	10.5%	7.5%	5.4%
Net Margin	9.9%	9.8%	5.6%	4.3%

One final thing: If you want to keep tabs on Polycom movements, and for more analysis on the company, make sure you add it to your Watchlist.

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