April 5, 2012
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Polycom (Nasdaq: PLCM ) plunged 16% on Thursday after the video conferencing systems specialist lowered its first-quarter sales and profit.
So what: Management cited shortfalls in Asia-Pacific and North America for the warning, triggering fresh concerns over the effect of Cisco's recent foray into the space. In fact, the shares are flirting with a new 52-week low on the news.
Now what: Management now sees adjusted first-quarter EPS of $0.21-$0.23 on revenue of $364 million-$370 million, well below the average analyst estimate of $0.30 on a top line of $397 million. "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 Polycom CEO Andrew Miller. While the Cisco threat is certainly alarming, Polycom's still-enviable competitive position, coupled with clear signs that demand is bottoming, make today's sell-off a seemingly solid bargain opportunity.
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