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Polycom profits plunge

Alex Scroxton

Voice and video virtuoso Polycom has beaten expectations despite announcing year-on-year falls in both sales and net profits for its third quarter, which ended on 30 September.

Sales were down 12% on Q3 2008, hitting $243m (£146.5m), while net profits shrunk 22% to $14m over the same period.

The vendor has previously told MicroScope it will be upping its game following the recent acquisition of its rival Tandberg by Cisco.

In the wake of that deal Polycom is seen as a possible takeover target, although it has not raised that possibility itself, with the official line being that keeping its independent voice in the video market will make it a powerful alternative to the Cisco marketing machine.

No suitors for the company have come forward, but despite the impact of the recession on sales, Polycom's underlying financials remain sound, which could make the firm a tempting target.

On a conference call, Polycom CEO Robert Hagerty said he planned to deepen the firm's strategic partnerships with major IT vendors, including Hewlett-Packard and Microsoft.

Polycom CFO and senior vice president of finance and administration, Michael Kourey explained the vendor had seen sequential sales growth, increased deferred revenues and a sharp increase in order backlog.

"As a result of this top-line performance and our proactive inventory reductions, we generated positive operating cash flow," Kourey said.

"Our sound balance sheet continues to underpin solid fundamentals and, net of $20m in share repurchases in Q3, we exited the quarter with $408m in cash and investments and no debt," he added.

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