Yesterday, after market closed, Polycom (PLCM) declared its fourth quarter 2009 financial results. Quarterly total revenue of $267.9 million was up 1.8% year-over-year and up 10% sequentially. The revenue was also better than the Zacks Consensus Estimate of $256 million. The increase was primarily due to strong demand for Video Solutions products, particularly the high-margin Network Systems products.

On a GAAP basis, net earnings in the quarter were $12.8 million or 15 cents per share compared to a net income of $25.7 million or 30 cents per share in the prior-year quarter. Decrease in net income was mainly due to a huge restructuring charge incurred by the company to reduce its workforce by 3%. Management informed that the headcount reduction was necessary to realign and reinvest resources in strategic growth areas. However, adjusted net income (excluding special items) in the reported quarter was $21 million or 24 cents per share, below the Zacks Consensus Estimate of 25 cents per share.

On a non-GAAP basis, quarterly gross margin was 58.9% compared to 60% in the year-ago quarter and 58.8% in the previous quarter. Operating expenses in the same quarter were $120.1 million compared to $111.8 million in the prior-year quarter.

The reported quarter was also the company’s 48th quarter of sequential positive cash flow from operations. Cash flow from operations was $67 .8 million compared to $50.5 million in the year-ago quarter. Free cash flow (cash flow from operation less capital expenditure) was $56 million compared to $38.3 million in the year-ago quarter.

At the end of fiscal 2009, Polycom had nearly $467.5 million of cash & marketable securities and no outstanding debt on its balance sheet compared to $324.5 million of cash & marketable securities and no outstanding debt at the end of the previous year.

Video Solutions Product Line (including Applicable Services Revenue): Quarterly revenue was $143 million, which remained flat year-over-year but was up 10% sequentially. This segment continues to generate the bulk (53.4%) of the quarterly revenue.

Voice Communications Solutions Product Line (including Applicable Services Revenue): Quarterly revenue was $81 million, down 6.9% year-over-year but up 3.9% sequentially. This product line generated 30% of the total revenue.

Network Systems Product Line (including Applicable Services Revenue): Quarterly revenue was $44 million, up 29.4% year-over-year and up 25.7% sequentially. This segment generated 16.6% of the total revenue.

Financial Outlook

Polycom has given a guidance that its first quarter 2010 revenue will decline 2% to 3% sequentially due to seasonality. Gross margin on a GAAP basis is expected to remain at 59%. Full fiscal 2010 revenue is expected to grow by high teens compared to the pervious year.

The share price of Polycom was down $1.17 (4.84%) to $23 in the after market trade on Nasdaq.

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