Polycom Shares Tumble After 3Q Results

NEW YORK (AP) — Shares of Polycom Inc. tumbled Wednesday after the maker of communications and video conferencing equipment posted solid results for the third quarter but gave a disappointing guidance for fourth-quarter operating margins due to higher expenses.

Shares fell $4.38, or 16.6 percent, to $21.99 in afternoon trading. In the past 52 weeks, the stock has traded between $12.19 and $28.43.

On Tuesday, Polycom reported adjusted earnings of 31 cents per share for the quarter, matching Wall Street's expectations. It posted revenue of $243 million, down 12 percent from a year earlier. Analysts polled by Thomson Reuters had expected sales of $236.4 million.

Stifel Nicolaus analyst Sanjiv Wadhwani called the company's guidance for 5 percent sequential revenue growth solid.

"However, the company guided to operating margins of only 14 percent due to higher operating expenses," the analyst wrote in a note to investors. "Management commented that the company is investing heavily in sales as it tries to grab share in a rapidly growing market."

The analyst, who rates the company "Buy," said that although he is disappointed in the margins, he thinks the opportunity in video is accelerating and Polycom's "strategy to invest in the core sales infrastructure should pay off."