Polycom Earnings Preview

Investors never know what to expect for Polycom (Nasdaq: PLCM  ) , as it has wavered between topping and missing analysts estimates during the past fiscal year. The company will unveil its latest earnings Wednesday. Polycom is a global provider of communications solutions.

What analysts say:

• Buy, sell, or hold?: Analysts strongly back Polycom, with 11 of 16 rating it a buy and the remainder rating it a hold. Analysts like Polycom better than competitor Logitech International overall. Analysts still rate the stock a moderate buy, but they are a bit more wary about it compared with three months ago.
• Revenue Forecasts: On average, analysts predict $388.4 million in revenue this quarter. That would represent a rise of 26.1% from the year-ago quarter.
• Wall Street Earnings Expectations: The average analyst estimate is earnings of $0.21 per share. Estimates range from $0.20 to $0.22.

What our community says:
CAPS All-Stars are solidly behind the stock with 92.2% assigning it an "outperform" rating. The community at large concurs with the All-Stars with 90.7% giving it a rating of "outperform." Fools are bullish on Polycom, though the message boards have been quiet lately with only 85 posts in the past 30 days. Despite the majority sentiment in favor of Polycom, the stock has a middling CAPS rating of three out of five stars.

Management:
Polycom's profit has risen year over year by an average of more than threefold over the past five quarters. The company boosted its gross margin by 2.4 percentage points in the last quarter. Revenue rose 24.1% while cost of sales rose 16.9% to $144.6 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	Q2	Q1	Q4	Q3
Gross Margin	60.4%	59.8%	59.8%	59.3%
Operating Margin	10.6%	10.5%	10.5%	7.5%
Net Margin	7.8%	9.9%	9.8%	5.6%

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