Polycom, Inc. (PLCM) Q1 2012 Results Earnings Call April 18, 2012 5:00 PM ET Executives Laura Graves – Vice President, Investor Relations Andy Miller – President and CEO Eric Brown – COO and CFO Analysts Jess Lubert – Wells Fargo Securities Kent Schofield – Goldman Sachs Tavis McCourt – Raymond James Jack Monti – UBS Sanjiv Wadhwani – Stifel Nicolaus Afiya – Citigroup Rohit Chopra –Wedbush Securities Jeff Kvaal – Barclays Presentation Operator [Call Starts Abruptly] (Operator Instructions)
Previous Statements by PLCM
» Polycom's CEO Discusses Q4 2011 Results - Earnings Call Transcript
» Polycom's CEO Discusses Annual Analyst and Investor Conference - Call Transcript
» Polycom CEO Discusses Q3 2011 Results - Earnings Call Transcript
» Polycom CEO Discusses Q2 2011 Results - Earnings Call Transcript
We will be making forward-looking statements on this call, including guidance regarding our expectation of future financial performance, which is subject to risks and uncertainties that could cause actual results to differ materially from our expectations.Please note that any financial guidance that we provide on this call is valid as of today only and we do not assume any responsibility to provide any updates of this guidance regardless of changes which may occur in the future. We discuss a number of the business risks that may cause our actual results to differ in detail in the company’s SEC reports, including most recently filed annual report on Form 10-K for the year ended December 31, 2011, and any forward-looking statements must be considered in the context of such risks and uncertainties. Polycom’s application of U.S. GAAP requires disclosures, the availability of new products, planned features and upgrades discussed during this call are subject to change or cancellation. We will be presenting both GAAP and non-GAAP financial measures here today. Please refer to our reconciliation of GAAP and non-GAAP financial measures in today’s earnings release, which is also posted on our website. Now, at this time, I’d like to turn the call over to Polycom’s President and CEO, Andy Miller. Andy Miller Thank you, Laura, and good afternoon, everyone. I’d like to start by addressing our results in Q1. We felt short of our initial expectations and are disappointed, and not having delivered against financial targets. As a management team, we have reviewed the recent trends, transactions and our results, with the following observations regarding our revenue shortfall in Q1. Number one, geographic, we saw government spending in several key geographies including China, Australia, India and in U.S. federal civilian come in lower than expected. This was combined with an already slow growth rate in North America.
Number two, product, we believe that we are in the midst of the company and industry transition from point products to solution selling. This mindset shift affects both our customers and our sales force. We saw customers pause to consider more UC centric strategies versus point product or endpoint-only deployments. We believe this transition has many positive benefits for our company over the longer term that clearly created softness in Q1.Number three, execution, based upon our strength in Q4 2011, we were too optimistic on Q1 growth rates. Hindsight is 20-20 and we got ahead of ourselves, and our Q4 to Q1 had a larger sequential decline that we had planned for. We overestimated the positive effect of Q4 year-end deal closure rates and we underestimated the work require to effectively ramp the North America sales team. Our plan of action to support and enable the sales team in Q2, and the balance of the year is in these following areas. Number one, sales execution, our plan includes more focus on net new referenceable accounts in the global 1,000, greater vertical market focus, improve field marketing and lead generation activities, added deployment of UC solutions through professional services, and improve solution selling training and productivity ramp. We’re also be looking forward to ramp our efforts with Microsoft in joint Lync Polycom opportunities. These activities are well underway in Q2, beginning with team Polycom, our annual sales and channel partner event that just occurred in the first week of April, which kicked off our solution selling and product innovation efforts. Number two, product, we will continue to invest in innovation to provide solutions that combine the elements of promise-based software and cloud, thereby allowing Polycom to continue to differentiate it solutions as best-in-class. To this end you can expect greater focus on the RealPresence Platform and innovative routes to the market in the second half of this year.
Number three, geographic, we will be aligning quarter carrying capacity against areas where we see opportunities. We will be limiting headcount growth in other areas where we are not seeing returns. Our marketing expenditures will center on reference selling and building pipeline for the balance of the year.Read the rest of this transcript for free on seekingalpha.com