SAN FRANCISCO (AP) — Polycom Inc. shares sank more than 23 percent Thursday after the videoconferencing equipment maker reported third-quarter results and fourth-quarter sales guidance that missed analysts’ expectations.
THE SPARK: Late Wednesday, Polycom said its net income, excluding one-time items, totaled 26 cents per share — a penny below what analysts polled by FactSet expected. The company’s revenue of $379 million was also lower than analysts’ estimates of $387 million, on average.
Polycom said its revenue rose in emerging markets and from sales to the federal government, but noted that sales elsewhere fell year-over-year.
During a conference call with analysts, the company predicted fourth-quarter revenue growth of 5 to 6 percent sequentially — or between $398 million and $402 million.
Analysts were expecting $415 million in fourth-quarter revenue.
Morgan Keegan analyst Tavis McCourt downgraded the stock to “Market Perform” from “Outperform” in a client note and reduced his price target for the stock by $3 to $22, saying the results indicate Polycom is struggling with the weak economy.
THE ANALYSIS: In his note McCourt called the company’s third-quarter “disappointing” and said its guidance marks the first time since 2009 that Polycom has forecast less than 20 percent revenue growth in a quarter.
McCourt lowered his 2011 estimates for Polycom, but said he has already priced a “mild recession” into his 2012 and 2013 estimates.
He thinks nervous customers are “clearly a reality” for the company, and they “may continue to delay purchase decisions, impacting Polycom’s growth over the next several quarters.”
SHARE ACTION: Polycom shares dropped $5.09, or 23.3 percent, to $16.74 in afternoon trading. In the past year, the stock has traded between $14.03 and $34.30.