Santa Cruz’s Plantronics gets boost from China’s hands-free law, reports record sales

Santa Cruz Sentinel

PamStrayer-pltSANTA CRUZ — Tough enforcement of new hands-free laws in China this year and an uptick in the global economy overall provided Plantronics a bigger than expected boost in headset sales, pushing it above previous expectations.

“Although we faced economic headwinds in the first half of the year, a stronger global economy in the second half of the year combined with growth in our UC (unified communications) revenues throughout the year led to an increase of 7 percent in revenues over the prior year,” said Pam Strayer, acting chief executive officer and chief financial officer.

Although typically a slower season for the headset maker, net revenues for the fourth fiscal quarter ending March 31 jumped 15 percent from a year ago to a record $204.18 million.

“Almost everyone was taken by surprise by the level of enforcement (by Chinese officials) at the beginning of the year,” said Ken Kannappan, chief executive officer and president. “Overall we did a good job in meeting the supply chain.”

Kannappan was on hand for the Q4 and year-end conference call with analysts and investors Tuesday despite being officially on leave since last month to undergo cancer treatment. He said at the start of the call that he is working when his treatment allows.

“During my leave, Plantronics is well-led by Pam, our CFO and acting CEO, and is well qualified to execute on our strategy and run day to day operations.” He gave no other report on his health.Kannappan ken

Kannappan had much to say, however, on the growing demand for unified communications, a technology that allows people to use the same headset while working on multiple platforms and devices in the office or on the move. The company reported 40 percent growth year over year in unified communications-related sales and predicted that level of growth will continue throughout the next five years.

“Unified communications continues to be our company’s key growth driver,” Kannappan said, noting unified communications revenues this year were $131 million, representing 24 percent of the company’s traditional office and contact center revenues. The unified communications technology is now linked to software that can record when the headset is on or off resulting in higher productivity outcomes and cost savings, Kannappan said. “Our innovations and breakthroughs in contextual intelligence and other product features and enhancements have spurred this growth and allowed us to maintain a premium position in the market.”

Last month, Frost & Sullivan, a global growth partnership company, awarded Plantronics its Visionary Innovation Award in recognition of its work in the unified communications and collaboration and customer care markets. Visionary Innovation, according to F&S, is “the ability to identify key mega-trends and proactively address unmet needs with disruptive solutions that can greatly improve business performance as well as individuals’ work and personal lives.”

Plantronics estimated the global market for UC was $2 billion in 2012 and will be $3.7 billion in 2017.

“UC remains our largest opportunity and we remain as confident as ever in the growth in the market and our ability to maintain leadership position,” Kannappan said. “We believe UC momentum is building.”

Plantronics estimated the global market for unified communications was $2 billion in 2012 and will be $3.7 billion in 2017.

Although the company saw a surge of sales in China, executives said they expect sales to taper off.

The company, which employs nearly 3,500 people worldwide, including almost 550 in Santa Cruz, is growing. The plan is to add “nearly 30 full-time employees” to the Santa Cruz office and more than 450 globally, according to Karen Auby, company spokeswoman. “In addition, we are actively recruiting almost 90 summer interns globally – about half of which are for internships in Santa Cruz.”

In other company news, Kannappan disclosed that he intended to sell $200,000 in stock options that are set to expire in the coming months.

Less than two weeks ago, the company announced a new head of human resources, Susan Lovegren, who comes most recently from Juniper Networks where she served as a corporate vice president leading the company’s Global Business Aligned Human Resources team. Prior to that she worked at Agilent technologies and Hewlett-Packard.

 

At a glance

Plantronics Inc.

WHAT: A publicly held telephone and computer headset maker.

HEADQUARTERS: 345 Encinal St., Santa Cruz.

BACKGROUND: Founded in 1961, Plantronics introduced the first lightweight communications headset in 1962.

LEADERSHIP: Pam Strayer is acting chief executive officer and chief financial officer, while Ken Kannappan, president and chief executive officer, is on leave.

EMPLOYEES: The company employs nearly 3,500 people, including almost 550 in Santa Cruz.

INFORMATION: 831-426-5858; www.plantronics.com.

STOCK PRICE: Shares trading on the NYSE under the ticker PLT closed Tuesday at $45.50, no change from yesterday. The 52-week range is $28.76-$46.02.

FINANCIALS: Fourth fiscal quarter net revenues were $204.18 million compared to $177.7 million a year ago. Net income for the quarter was $28.71 million compared to $23.89 million a year ago. Diluted earnings per share were 67 cents compared to 55 cents a year ago. The company finished the quarter with about $ 345.36 million in cash, cash equivalents and short- and long-term investments.

DIVIDEND: The company declared a quarterly dividend of 10 cents per share, payable on June 10, to stockholders of record at the close of business on May 20, 2013.

GUIDANCE: For the first quarter of fiscal 2014, the company forecast net revenues of $198 million to $205 million, diluted earnings per share of 56-62 cents.

 

A version of this article on Plantronics was first published here.

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