To keep your marriage brimming
With love in the loving cup,
Whenever you're wrong, admit it;
Whenever you're right, shut up.
-- "A Word to Husbands" by Ogden Nash, 1964
Telepresence, voice, and video conference expert Polycom
It's like what I tell my kids sometimes: Fess up to your mistakes now to avoid a bigger punishment later. Investors wouldn't appreciate Polycom sweeping this bad news under the rug just because there was a procedure to follow.
Oh, but the market reaction smarts anyhow. Polycom shares plunged as much as 21% overnight as management slashed its revenue guidance for the just-completed quarter by 8%. The company didn't offer earnings guidance alongside the last earnings report, but a fresh target of about $0.22 per share (adjusted) falls far short of the $0.30 Wall Street consensus.
These numbers are not only below expectations, but also less than required to keep the company operating on a healthy level. "Polycom's current operating model assumes a higher level of revenue growth, and we will analyze our assumptions between now and our regularly scheduled call on April 18th," said CEO Andy Miller. In other words, Polycom's operating model is broken at the moment, please check back later to see how we plan to fix it. The recently promised turnaround of American sales clearly isn't working out as planned.
The weakness was particularly bad in the Asia-Pacific and North America regions. Some analysts figure that Polycom's troubles stem from Cisco Systems
As if to underscore the theory of soft digital communications markets, rather than a shift in relative sales, sector neighbors Cbeyond
Polycom is a longtime favorite of David Gardner's Rule Breakers team, but David is much more excited about stocks from a totally different sector these days.