The hottest Polycom finally found a loving home

Has Polycom finally found a loving home

has Polycom finally found a loving home

--plantronics' acquisition is not without risks, but it is beneficial to all interested parties

10:56:16 Author: Source: CTI forum comment: 0 Click:

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cti Forum () news on April 18 (compiled by Lao Qin): on March 28, the world learned that Plantronics (nyse:plt) and ploycom (Polycom) signed a final agreement, Plantronics (the party with the lower middle-aged income of the two companies, about $880million) will acquire ploycom (with an annual income of about $1.1 billion), with a total transaction price of $2billion in the form of cash/stock hybrid transactions

the board of directors of the two companies has approved the transaction, and it is expected that the approval of the regulatory authorities will be completed by the end of the third quarter of 2018. After the transaction, Siris' managing partner Frank Baker and Siris' executive partner Daniel Moloney will join the board of Plantronics

for those who need knowledge supplement, it is important to know that in September 2016, Polycom, which was listed, was acquired by Siris capital group, a private equity company, with an amount of about $2billion, which can avoid the situation that the valley value is close to or zero to some extent

what happened after that? Facts have proved that quite a lot

before being acquired in September 2016, Polycom CEO Peter leav had significantly reduced operating expenses

at present, Mary McDowell, CEO of Polycom (a former executive partner of Siris capital, a former executive vice president of Nokia, and a member of the board of directors of UBM) has been working on this line to reduce costs as much as possible. But more importantly, McDowell and her main new management team have redirected the company's efforts and investment to a new corporate mission - in short, in my words, to become the primary provider of audio, video and mainly water losing content sharing solutions for enterprises

basically, Siris saw that Polycom's IP business developed well and made huge profits. Compared with video and collaboration business, the pressure was relatively small. Therefore, a new strategy was born -- to make Polycom's video business look like its IP business

in order to achieve this goal, the company is more focused on the partnership with Microsoft, and has also established partnerships with bluejeans, zoom and other companies, hoping to sell Polycom video devices to the customers of these suppliers

although I appreciate the company's relatively simple IP business, I have been skeptical about the company's video/collaboration department's plan to be more device centric since the first day

my main question is that in the field of video conferencing, today's customers give priority to workflow rather than device performance. In my opinion, Polycom's device centric mentality means giving up control of the entire workflow and ultimately determining its own destiny

the result proved that I was right and wrong

on my right side, Polycom's business continues to flourish under Siris' leadership, and its video and collaboration business has experienced a more difficult period - partly because of market transformation, and partly because Polycom chose the device centric path

in my fault, this device first approach makes the company an ideal acquisition target for Plantronics -- there are only two companies in our field. I think they are not only good at manufacturing hardware, but also proud of the hardware they make. While other companies are trying to squeeze services and recurring revenue into their financial statements, Plantronics continues to do what it is good at. Another company that excels in this area is Logitech

from the long-term value of Polycom, its mistake is that it does not emphasize workflow, but tends to focus on equipment, which is the right way to achieve Siris' medium-term goal - quickly sell Polycom and make a considerable profit

so what are the benefits of this deal

for siris

according to my estimation (remember that I am not an investment banker, so please check my math), Siris is likely to make a considerable profit from this transaction

some people have asked me how to buy a company at a price of $2billion and sell it at the same price a year and a half later. Can I make a profit? Sounds like a new math problem, doesn't it? The answer is twofold:

after Siris' acquisition, Polycom has more cash and securities on its books than debt

according to the Plantronics draft of the transaction, Polycom generated an operating profit margin revenue of about $180million in 2017

therefore, although we don't know very well, we expect Siris to do well in this transaction

for Plantronics

through this acquisition, Plantronics can rapidly expand its/audio/uc product portfolio. This provides several key benefits:

allows Plantronics customers and channel partners to purchase headphones, phones, video systems, etc. from one supplier

provides an entrance to new markets, significantly increasing the company's TAM (total available market)

extends Plantronics' services in a variety of ways, including Microsoft UC expertise, managed services, and cloud based management and analysis

add the mature roster of a/v, VC and it centric channel partners to the Plantronics channel project

add Polycom and Siris' management expertise and experience to Plantronics' existing leadership team

therefore, Plantronics has expanded its equipment footprint in the enterprise, enabling it to better compete with companies such as Logitech and Cisco

for Polycom

becoming a part of Plantronics provides Polycom with what it needs very much for a long time, a stable family. A person who understands and appreciates equipment

polycom's bosses and CEOs (Miller, Parker, leav, McDowell) have experienced roller coaster changes and changed their strategies for seven years. Perhaps the acquisition by Plantronics will usher in an era of peace and stability

in addition, joining Plantronics, a headphone giant, has also increased Polycom's exposure in the UC market and access to Plantronics' central channels

my opinion

generally speaking, I have a reason to give my thumbs up to this transaction. Siris made some money for his time and risk. Plantronics has expanded its technology and TAM in products and services. Polycom enjoys a bonus to escape the storm -- find the returning Bob Hagerty (former CEO of Polycom and current board member of Plantronics and chairman of the strategy and M & a committee) and Joe Burton (former executive vice president and Chief Strategic Officer of Polycom and current CEO and President of Plantronics). I hope this is a wonderful homecoming Festival

obviously, this transaction is not without risks. For example, I am worried that Plantronics will not provide Polycom's video business, which accounts for at least 50% of Polycom's total revenue between hardware and services, which is worthy of attention and needs attention

in addition, the agreement did not address the concerns of some Polycom channel partners and customers, who believed that Polycom's future success depended on the company having more (rather than less) overall communication experience and workflow

finally, in my humble opinion, this transaction is the best time for Siris. Considering this -- just two months ago, Cisco acquired BroadSoft -- this move may reduce Polycom's chances of long-term opening up sip/voip. In addition, the hardware video conferencing terminal market is still struggling. Polycom's value may decline over time

if nothing else, we will continue to live in interesting times

the author of this article is the founder of a new analyst company called Recon Research (RR). You can consult our staff. This new company will cover a/v, conferencing, and UC -- but in a completely different way. RR's public debut will take a few weeks

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