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: "Second verse, same as the first." Three months ago, Polycom (Nasdaq: PLCM) investors were happy about a post-earnings 10% pop in their stock. Fast-forward to Q4 earnings, and this time around the shares are doing even better -- up a whopping 18%.

So what: Polycom blew right past Street estimates for Q4, earning pro forma profits of $0.49 per share on $340 million in real revenues. Projections for the quarter to come are for only flat-to-slightly down revenues, but even that sad promise is better than what Wall Street had told us to expect -- hence the spike in the share price.

Now what: Good as all that sounds, the story actually gets better as you move from the numbers to "the color." While challenges from videoconferencers Cisco (Nasdaq: CSCO), Google, and Skype remain, Polycom's putting together an impressive array of alliances with industry titans Microsoft, IBM, and Hewlett-Packard, and partnering with AT&T, Verizon, BT, and China Unicom as well.

Even if Q1 2011 looks a bit slow, management promises to produce "significant revenue growth" and "expanding operating margins" as the year progresses. If it can deliver, then an 18% pop in share price could be only the beginning.


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Fool contributor Rich Smith owns shares of Google. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Polycom is a Motley Fool Rule Breakers recommendation. Microsoft is a Motley Fool Inside Value pick. The Fool has created a bull call spread position on Cisco Systems. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of International Business Machines and Microsoft. Motley Fool Alpha owns shares of Cisco Systems.