MIZZOU INVESTMENT FUND MANAGEMENT
ANALYST: MARC PAINTER
October 24th, 2012
Company
Polycom
Ticker
PLCM
Current Price
$9.16
Target Price

Price Range

Recommendation

Basic Statistics
52 Week Price Range
$7.45 - $22.34
Market Cap
$1.62B
Shares Outstanding
176.84M
Institutional Ownership
97.00%
Trading Volume
342,585.00
Equity Beta
1.18
Dividend Yield
N/A
Next 5Yr Growth Estimate (per annum)
12.38%
Table 1 Source: Yahoo! Finance
Key Ratios
P/E (Last Close)
15.18
P/B (Last Close)
1.17
ROA (LF)
5.28%
ROE (LF)
7.01%
Profit Margin (LF)
1.83%
PEG
1.20
Table 2 Source: Bloomberg Terminal

Industry: Information Technology
Sub Industry: Communications Equipment
Summary
Polycom announced a new slew of products, which are all backward and forward compatible, cutting down transition costs
Polycom, Inc.’s new product CloudAXIS aims to secure interoperability among Skype, Google, Facebook, Apple, and other IM services
Management expects to double operating margins to 20% over the next several years

Company Description – Polycom moves towards ubiquitous software solutions Polycom, Inc. is a leading company in the unified communication (UC) solutions and provider of video, telepresence, voice, and infrastructure solutions1. Polycom’s technology enables corporations and individuals to connect through an HD visual experience. Polycom’s vision is to move toward ubiquitous video collaboration between all video software including Apple Face Time, Skype, and Facebook Video Chat, among others. The company was founded in 1990 and is currently headquartered in San Jose, California.
Polycom categorizes its products and services into three categories: Network Infrastructure, UC Group Systems, and UC Personal Devices.
Numbers in Millions
2011
2010
Revenue
$1,495.80
$1,218.49
UC Group Systems
$971.75 (64.97%)
$795.81 (65.31%)
UC Personal Devices
$269.28 (18.00%)
$239.07 (19.62%)
Network Infrastructure
$254.76 (17.03%)
$183.62 (15.07%)
Table 3: Revenue by Segment for 2010 & 2011
The table above shows the change in revenue by segment from 2010 to 2011. It should be noted that prior to 2010, Polycom used a different segment structure, making it difficult to compare to years prior3.
Network Infrastructure, which made up 17.03% of total revenues for 2011, includes the conferencing infrastructure, distributed media applications, recording streaming security, management applications, and remote access with the RealPresence Platform2. The increase in revenue over the past year for Network Infrastructure can be attributed to the RealPresence Platform, which is Polycom’s move toward universal video collaboration. We can expect this segment to be the main growth area for Polycom.
UC Group Systems, which accounted for 64.97% of 2011 revenues, includes group video, group voice, and telepresence systems2. Revenue in this segment is comprised of the sale of hardware products and services focused on implementing remote location. Types of products include conference phones and desktop video offerings.
Finally, UC Personal Devices comprised 18.00% of revenues in 2011 and is made up of wireless LAN (local area network) products, desktop video devices, and desktop voice products2. These products are marketed towards individuals and are higher quality, such as HD voice and video devices.
Management – a capable but overpaid CEO and executive management with little exposure to the company’s stock performance The President, CEO, and Director of Polycom, Inc. is Andrew M. Miller. Miller has been with Polycom since July, 2009 and has been CEO since May, 2010. Miller has worked at technology related companies most of his career; he worked at Cisco Systems from 1990 to 2001, was CEO of Tandberg ASA from 2002 to 2006, and was global president of IPC Information systems from 2007 to 2009. While CEO of Tandberg, Miller helped the company increase its gross profit by 38.67% on average per year. Tandberg was bought by Cisco on