Polycom Inc. (PLCM, Financial) filed Quarterly Report for the period ended 2009-06-30.
Polycom Inc. develops manufactures and markets a full range ofhigh-quality media-rich communication tools and network solutions. The company\'s broadband communication solutions enable business users to immediately realize the benefits of video voice and data over rapidly growing converged networks. The company is the leading videoconferencing and voice conferencing product provider and have recently entered the DSL access market particularly in the area of integrated voice appliances and broadband access devices. Polycom Inc. has a market cap of $1.99 billion; its shares were traded at around $23.75 with a P/E ratio of 24.6 and P/S ratio of 1.8. Polycom Inc. had an annual average earning growth of 19.1% over the past 5 years.
Video Solutions segment revenues include revenues from sales of our video communications and infrastructure product lines. Revenue from video communications products decreased to $105.1 million for the three months ended June 30, 2009 from $123.3 million in the year ago period, a 15% decrease. Revenue from video communications products decreased to $206.6 million for the six months ended June 30, 2009 from $237.1 million in the year ago period, a 13% decrease. The revenue decreases in the three and six month periods were primarily due to a decrease in sales volumes of our VSX® product family, partially offset by increases in sales volumes of our HDX® product family and new products, such as our Polycom® CX5000 video solution. Revenues from our infrastructure products for the three months ended June 30, 2009 were $21.8 million, up 32% from revenues of $16.5 million in the comparable 2008 period. Revenues from our infrastructure products for the six months ended June 30, 2009 were $42.1 million, up 24% from revenues of $34.0 million in the comparable 2008 period. The revenue increases in both periods is primarily due to increases in our video infrastructure and software revenues, which was driven by the introduction of new products and enhancements to existing products. Our voice infrastructure product revenues also contributed to the growth during the six months ended June 30, 2009 as compared to the six months ended June 30, 2008, when they were essentially zero.
Voice Communications Solutions product revenues decreased in the three and six month periods primarily due to lower sales volumes of voice communications products, including our circuit-switched, wireless, Voice-over-IP and installed voice product lines. Revenues from our Voice Communications Solutions have declined year-over-year since the fourth quarter of 2008. We believe these declines are primarily a result of the global economic climate and that this business will improve as the economy improves. The second quarter of 2009 was flat sequentially to the first quarter of 2009, as compared to the sequential declines we experienced in the first quarter of 2009, fourth quarter of 2008, and the third quarter of 2008 of 22%, 12%, and 5%, respectively.
International sales, or revenues outside of the U.S. and Canada, accounted for 46% of total revenues for each of the three month periods ended June 30, 2009 and 2008, and 46% and 47% of total revenues in the six month periods ended June 30, 2009 and 2008, respectively. On a regional basis, North America, Europe, Asia Pacific and Latin America accounted for 54%, 24%, 19% and 3%, respectively, of our total revenues for the three months ended June 30, 2009 and 54%, 25%, 18% and 3%, respectively, of our total revenues for the six months ended June 30, 2009. North America, Europe, Asia Pacific and Latin America revenues decreased 15%, 20%, 8% and 23%, respectively, in the three months ended June 30, 2009 over the comparable 2008 period. North America, Europe, Asia Pacific and Latin America revenues decreased 14%, 18%, 7% and 22%, respectively, in the six months ended June 30, 2009 over the comparable 2008 period. The decrease in revenues is primarily a result of the global economic climate. We have a hedging program that uses forward-exchange contracts to hedge against foreign currency fluctuations for a portion of anticipated revenues denominated in the Euro and British Pound. During the three and six months ended June 30, 2009, our European revenues included a $4.6 million and $10.7 million benefit related to our hedging activities compared to a $1.3 million and $1.8 million decrement to revenue during the three and six months ended June 30, 2008. In both the first six months of 2009 and 2008, revenues from sales denominated in Euros and British Pounds comprised less than 20% of our total worldwide revenues. The impact in any given quarter of our hedging programs is dependent upon a number of factors, including the actual level of foreign currency denominated revenues, the percentage of actual revenues covered by our hedge contracts, the exchange rate in our underlying hedge contracts and the actual exchange rate during the quarter. Based upon our outstanding hedge contracts, we anticipate that the hedging benefit to our revenues will likely decrease throughout the remainder of 2009, depending on the future exchange rates of the U.S. dollar versus the Euro and the British Pound, which would also have a negative impact on our gross margins. See Note 9 of Notes to Condensed Consolidated Financial Statements for further information on our hedging activities.
During the three months ended June 30, 2009, one channel partner accounted for 11% of our total net revenues and Video Solutions segment revenues and 16% of our Voice Communications Solutions revenue. During the six months ended June 30, 2009, one channel partner accounted for 10% of our total net revenues, 11% of our Video Solutions segment revenues and 13% of our Voice Communications Solutions revenue. No one customer accounted for more than 10% of our Services segment revenues during the three or six months ended June 30, 2009. During the three and six months ended June 30, 2008, no one customer accounted for more than 10% of our total net revenues or of our Voice Communications Solutions or Services segment revenues. One channel partner accounted for 12% and 11%, respectively, of our Video Solutions segment revenues during the three and six months ended June 30, 2008. We believe it is unlikely that the loss of any of our channel partners would have a long term material adverse effect on our consolidated net revenues or segment net revenues as we believe end-users would likely purchase our products from a different channel partner. However, a loss of any one of these channel partners could have a material adverse impact during the transition period. We also sell our voice infrastructure products directly to end-users, and the revenues in the Video Solutions segment from end-users are subject to more variability than our revenues from our reseller customers.
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Polycom Inc. develops manufactures and markets a full range ofhigh-quality media-rich communication tools and network solutions. The company\'s broadband communication solutions enable business users to immediately realize the benefits of video voice and data over rapidly growing converged networks. The company is the leading videoconferencing and voice conferencing product provider and have recently entered the DSL access market particularly in the area of integrated voice appliances and broadband access devices. Polycom Inc. has a market cap of $1.99 billion; its shares were traded at around $23.75 with a P/E ratio of 24.6 and P/S ratio of 1.8. Polycom Inc. had an annual average earning growth of 19.1% over the past 5 years.
Highlight of Business Operations:
Our Video Solutions, Voice Communications Solutions and Services segments accounted for 55%, 27% and 18%, respectively, of our revenues during both the three and six months ended June 30, 2009, compared with 51%, 35% and 14%, respectively, of our revenues in both the three and six months ended June 30, 2008. See Note 12 of Notes to Condensed Consolidated Financial Statements for further information on our segments, including a summary of our segment revenues, segment contribution margin and segment inventory.Video Solutions segment revenues include revenues from sales of our video communications and infrastructure product lines. Revenue from video communications products decreased to $105.1 million for the three months ended June 30, 2009 from $123.3 million in the year ago period, a 15% decrease. Revenue from video communications products decreased to $206.6 million for the six months ended June 30, 2009 from $237.1 million in the year ago period, a 13% decrease. The revenue decreases in the three and six month periods were primarily due to a decrease in sales volumes of our VSX® product family, partially offset by increases in sales volumes of our HDX® product family and new products, such as our Polycom® CX5000 video solution. Revenues from our infrastructure products for the three months ended June 30, 2009 were $21.8 million, up 32% from revenues of $16.5 million in the comparable 2008 period. Revenues from our infrastructure products for the six months ended June 30, 2009 were $42.1 million, up 24% from revenues of $34.0 million in the comparable 2008 period. The revenue increases in both periods is primarily due to increases in our video infrastructure and software revenues, which was driven by the introduction of new products and enhancements to existing products. Our voice infrastructure product revenues also contributed to the growth during the six months ended June 30, 2009 as compared to the six months ended June 30, 2008, when they were essentially zero.
Voice Communications Solutions product revenues decreased in the three and six month periods primarily due to lower sales volumes of voice communications products, including our circuit-switched, wireless, Voice-over-IP and installed voice product lines. Revenues from our Voice Communications Solutions have declined year-over-year since the fourth quarter of 2008. We believe these declines are primarily a result of the global economic climate and that this business will improve as the economy improves. The second quarter of 2009 was flat sequentially to the first quarter of 2009, as compared to the sequential declines we experienced in the first quarter of 2009, fourth quarter of 2008, and the third quarter of 2008 of 22%, 12%, and 5%, respectively.
International sales, or revenues outside of the U.S. and Canada, accounted for 46% of total revenues for each of the three month periods ended June 30, 2009 and 2008, and 46% and 47% of total revenues in the six month periods ended June 30, 2009 and 2008, respectively. On a regional basis, North America, Europe, Asia Pacific and Latin America accounted for 54%, 24%, 19% and 3%, respectively, of our total revenues for the three months ended June 30, 2009 and 54%, 25%, 18% and 3%, respectively, of our total revenues for the six months ended June 30, 2009. North America, Europe, Asia Pacific and Latin America revenues decreased 15%, 20%, 8% and 23%, respectively, in the three months ended June 30, 2009 over the comparable 2008 period. North America, Europe, Asia Pacific and Latin America revenues decreased 14%, 18%, 7% and 22%, respectively, in the six months ended June 30, 2009 over the comparable 2008 period. The decrease in revenues is primarily a result of the global economic climate. We have a hedging program that uses forward-exchange contracts to hedge against foreign currency fluctuations for a portion of anticipated revenues denominated in the Euro and British Pound. During the three and six months ended June 30, 2009, our European revenues included a $4.6 million and $10.7 million benefit related to our hedging activities compared to a $1.3 million and $1.8 million decrement to revenue during the three and six months ended June 30, 2008. In both the first six months of 2009 and 2008, revenues from sales denominated in Euros and British Pounds comprised less than 20% of our total worldwide revenues. The impact in any given quarter of our hedging programs is dependent upon a number of factors, including the actual level of foreign currency denominated revenues, the percentage of actual revenues covered by our hedge contracts, the exchange rate in our underlying hedge contracts and the actual exchange rate during the quarter. Based upon our outstanding hedge contracts, we anticipate that the hedging benefit to our revenues will likely decrease throughout the remainder of 2009, depending on the future exchange rates of the U.S. dollar versus the Euro and the British Pound, which would also have a negative impact on our gross margins. See Note 9 of Notes to Condensed Consolidated Financial Statements for further information on our hedging activities.
During the three months ended June 30, 2009, one channel partner accounted for 11% of our total net revenues and Video Solutions segment revenues and 16% of our Voice Communications Solutions revenue. During the six months ended June 30, 2009, one channel partner accounted for 10% of our total net revenues, 11% of our Video Solutions segment revenues and 13% of our Voice Communications Solutions revenue. No one customer accounted for more than 10% of our Services segment revenues during the three or six months ended June 30, 2009. During the three and six months ended June 30, 2008, no one customer accounted for more than 10% of our total net revenues or of our Voice Communications Solutions or Services segment revenues. One channel partner accounted for 12% and 11%, respectively, of our Video Solutions segment revenues during the three and six months ended June 30, 2008. We believe it is unlikely that the loss of any of our channel partners would have a long term material adverse effect on our consolidated net revenues or segment net revenues as we believe end-users would likely purchase our products from a different channel partner. However, a loss of any one of these channel partners could have a material adverse impact during the transition period. We also sell our voice infrastructure products directly to end-users, and the revenues in the Video Solutions segment from end-users are subject to more variability than our revenues from our reseller customers.
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