Polycom Reaches over $1 Billion

[Peter]

olycom Reports Fourth Quarter and Fiscal Year 2008 Earnings
Wednesday January 21, 4:05 pm ET
2008 Full-Year Revenue Growth of 15 Percent to a Record $1.1 Billion; 2008 Operating Cash Flow of $166.6 Million; Fourth Quarter Revenues of $263.0 Million With Operating Cash Flow of $50.5 Million

PLEASANTON, CA--(MARKET WIRE)--Jan 21, 2009 -- Polycom, Inc. (NasdaqGS:PLCM - News), the global leader in telepresence, video and voice communications solutions, today reported its earnings for the fourth quarter ended Dec. 31, 2008.
Fourth quarter 2008 consolidated net revenues were $263.0 million, compared to $263.3 million for the fourth quarter of 2007. Non-GAAP net income for the fourth quarter of 2008 was $35.2 million, or 42 cents per diluted share. This compares to Non-GAAP net income of $38.5 million, or 42 cents per diluted share, for the fourth quarter of 2007. GAAP net income for the fourth quarter of 2008 was $25.7 million, or 30 cents per diluted share, compared to $22.8 million, or 25 cents per diluted share, for the same period last year.

For the year ended Dec. 31, 2008, net revenues were $1.1 billion, compared to $929.9 million for the year ended Dec. 31, 2007. Non-GAAP net income for the year ended Dec. 31, 2008 was $130.4 million, or $1.49 per diluted share, compared to $128.9 million, or $1.37 per diluted share, for the comparable period of 2007. GAAP net income for the year ended Dec. 31, 2008 was $75.7 million, or 87 cents per diluted share, compared to GAAP net income of $62.9 million, or 67 cents per diluted share, for the same period last year.

The reconciliation between GAAP net income and Non-GAAP net income is provided in the tables at the end of this release.

On a product line basis, consolidated net revenues for the fourth quarter of 2008 were comprised of:


-- 67 percent video solutions, or $175.9 million (54 percent video
communications, or $141.7 million, and 13 percent network systems, or $34.2
million); and
-- 33 percent voice communications, or $87.1 million.

This compares to the fourth quarter of 2007, in which consolidated net revenues were comprised of:


-- 63 percent video solutions, or $164.9 million (49 percent video
communications, or $129.2 million, and 14 percent network systems, or $35.7
million); and
-- 37 percent voice communications, or $98.4 million.

"We are pleased to have surpassed the $1 billion revenue mark in 2008," said Robert Hagerty, Polycom's chairman and CEO. "As the largest company in the Unified Collaboration industry, Polycom generated year-over-year growth in our Video Solutions business, illustrating the resilience of our fast-ROI video offering. With our Voice business showing more sensitivity to the economic environment, Polycom proactively took action in Q4 to reduce our operating cost structure and, as we announced earlier this month, we have implemented a restructuring plan designed to optimize our cost structure as we move into 2009."

"With our rapid pace of innovation and the full breadth of our offering, we believe Polycom is the best positioned in the industry to deliver the cost-savings benefits of video adoption to our customers. Our strategic partnerships with Avaya, Cisco, IBM, Microsoft, and others enable us to provide integrated solutions that capture the full benefits of Unified Collaboration. These partnerships differentiate Polycom as the solutions provider of choice for companies who describe our collaboration solution as a strategic technology investment. In spite of the challenging economy, through our leading solutions and go-to-market strategy and, of course, our improved cost structure, we expect to continue to gain strength competitively in 2009 and to deliver solid operating results," Hagerty concluded.

"Driven by $263.0 million in revenues and strong operating margins, Polycom generated $50.5 million in positive operating cash flow during the fourth quarter," said Michael Kourey, Polycom's senior vice president, finance and administration, and CFO. "Contributing to Polycom's 44th consecutive quarter of positive operating cash flow was the four day year-over-year improvement in DSO to 44 days and a 3 percent sequential reduction in inventories. Polycom exits 2008 with a strong balance sheet, including $324.5 million in cash and investments and no debt."