Santa Cruz’s headset company Plantronics beats expectations for second quarter; company forecasts problems on horizon

Santa Cruz Sentinel

 

Ken Kannappan, CEO

SANTA CRUZ — An improving economy boosted Plantronics sales in the second fiscal quarter, but executives told analysts Tuesday that the current quarter is showing weakness in its core business — office and contact center products. Sales in that arena are expected to slow, and the future is uncertain, they said.

The Santa Cruz headset maker reported that sales of products for the mobile user climbed slightly year over year but the real jump came in the office and call center arena, which saw a 16 percent jump in sales from last year. Contributing to that increase was a 70 percent jump in sales relating to the rapidly developing unified communications market, which has become a huge focus for the company in recent years.

Unified communications products give users the ability to move from place to place using the same headset to communicate via all devices and platforms. The technology is rapidly advancing and companies are adopting it as they consolidate operations and employ more mobile workers.

Referring to improved operating income in the quarter and the jump in UC sales,

, Plantronics’ chief executive officer and president, said the company had achieved some key records.

OCC net revenues were $136.4 million in the second quarter of fiscal 2012 compared with $118 a year ago. Revenues of UC products were $22.4 million compared with $13.3 million a year ago.

“We’ve seen growing interest and awareness of the need to change the way most professionals work,” Kannappan said Tuesday on a conference call with analysts. Plantronics, he said, is a leader in UC as well as the emerging market of contextualized communications which refers to technology that “senses” a user’s actions and operates accordingly.

“I think that what we are on the brink of is a very fundamental strategic change where we have got incredibly valuable information — with sensors understanding whether somebody has something on or not and being able to turn that into context about what somebody is doing, what they want to do and thereby enabling communications systems to be more effective to allow somebody themselves to do complex things more easily, intuitively,” Kannappan said. “It is a very, very rich and fertile space.”

Barbara Scherer, senior vice president of finance and administration and CFO, said the company generated about $37 million in cash from operations in the second fiscal quarter and continues to have a strong financial position. The company has spent nearly $90 million on repurchases of common stock as part of an accelerated repurchase program announced in August.

The company, however, faces “unusual certainty” about the current quarter, she said, describing a “highly volatile macro environment.” Although spending in the office and contact center category typically climbs in the December quarter, she expected OCC revenues to be down sequentially.

“We’ve grown concerned about the outlook due to the impact it could have on our core OCC business and have deferred hiring plans and discretionary spending where we felt we could to bring our expenses down sequentially rather than continue to grow them,” Scherer said. “Decisions like this are being made in many companies, putting plans on hold, even if just for a few months, so as to gain greater visibility with the benefit of time.”

At a Glance

Plantronics Inc.

HEADQUARTERS: Santa Cruz
EMPLOYEES: The company employs about 3,125 people, about 520 of whom work in Santa Cruz.
INFORMATION: 831-426-5858,
www.plantronics.com
STOCK PRICE: Shares trading on the NYSE were down $1.43 Tuesday to close at $31.98. The 52-week range is $27.27 to $39.23.
FINANCIALS: Second fiscal quarter net income was $27.52 million, or 60 cents diluted earnings per share, compared with $25,429 million, or 52 cents diluted earnings per share, a year ago. Net revenues were $179.95 million compared to $158.255 million a year ago. The company finished the quarter with $349 million in cash, cash equivalents and short- and long-term investments. Plantronics also announced a 5 cent per share quarterly dividend payable on Dec. 9 to stockholders of record at the close of business on Nov. 18
GUIDANCE: The company expects third quarter revenues to be $175 million to $185 million with earnings per share of 60-70 cents.

 

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