Polycom (PLCM) May Trounce Cisco (CSCO) but Eat Its Own Lunch in Process

January 15, 2013 10:49 AM EST
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Price: $12.47 --0%

Rating Summary:
    2 Buy, 14 Hold, 3 Sell

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    Up: 35 | Down: 31 | New: 11
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Analyst at William Blair think video conferencing specialist, Polycom (NASDAQ: PLCM), will post a solid Q4. The analysis is based in part on positive channel checks. Polycom just rolled out a host of new products, which may help it continue to improve as Cisco (Nasdaq: CSCO)/ Tandberg stalls, says analyst Jason Ader.

"Perhaps the biggest benefit of the product launch is that it represents a clear leapfrog over primary competitor Cisco, whose video product development appears to have stagnated since the Tandberg acquisition. This could create a nice share gain window for Polycom in coming quarters," said Ader.

Gains are partially offset by meek 3 percent revenue growth.

"Our biggest concern continues to be that Polycom's shift from a pure hardware business to more of a software business will be deflationary and cannibalistic. On the endpoint side, we expect more customers to opt for software video clients over expensive room systems. On the infrastructure side, SVC media relay will reduce the need for hardware‐intensive transcoding, driving down price per port,” warned Ader.

William Blair has a Market Perform rating on Polycom (NASDAQ: PLCM).

For an analyst ratings summary and ratings history on Polycom click here. For more ratings news on Polycom click here.

Shares of Polycom closed at $11.48 yesterday.

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William Blair


Cisco v Polycomm
Quincy on 2013-01-15 14:37:11
Mark as Spam | Reply to this comment

This analysis ignores the fact that Cisco sells the routers and switches for the service providers. Cisco would love to sell more TelePresence systems, but it wins either way. More data on the network means more Cisco devices being bought and sold. Even if Polycom makes incremental market share gains, it is only in one market and Cisco owns the core network and SP markets.

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