When Cisco Systems
But perhaps Mr. Market was just waiting for an excuse to punish Polycom. When the company reported third-quarter earnings last night, sales came in at $243 million, a 5% sequential increase but 12% year-over-year fall. Non-GAAP earnings landed at $0.31 per share. Both metrics met or beat analyst expectations. But Polycom's stock price fell 17% overnight anyway. Ouch!
Analysts poured an avalanche of Tandberg-related questions over Polycom's management team in the earnings call, and came away with a cheerful spin on the situation more often than not. CEO Robert Hagerty said that the buyout probably will confuse Tandberg's and Cisco's TelePresence customers: "Is it going to be the Cisco solution? Is it going to be the Tandberg solution? … And which investments should you be making? I think the right answer is Polycom is the stabilizing force with superior innovation, a real strong platform. We want to get that message out."
Hagerty waxed poetic about Polycom's unique position as the last real alternative to the upcoming Cisco dominance, and mused about partnering up with someone like Microsoft
You may have heard this argument before when enterprise messaging vendor Tibco Software
Maybe Polycom's proclamations of strength came across as a little bit too earnest, or even desperate. Mr. Market didn't seem to believe any of it. If Cisco is setting up to monopolize Polycom's largest market, then the drop was justified. But if you believe that the sector needs Polycom's vendor-neutral technical glue, this could be an awesome buy-in opportunity.
Me, I think Polycom shares suddenly look cheap. The comments box below is dying to hear your take.
Fool contributor Anders Bylund holds no position in any of the companies discussed here. Polycom is a Motley Fool Rule Breakers pick. Microsoft is a Motley Fool Inside Value recommendation. The Fool owns shares of Oracle. Try any of our Foolish newsletters today, free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.