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Down economy weighs on Plantronics’ quarterly numbers, president says

Santa Cruz Sentinel

Kannappan kenSANTA CRUZ — Plantronics revenues were up but earnings were down for the second quarter of fiscal 2014, the headset maker reported Tuesday.

The numbers came in just below the midpoint of the company’s guidance. Sales climbed nearly $15 million to $194 million, an increase of 8.1 percent from a year ago. Earnings per share, however, were down to 53 cents, a 13.1 percent drop.

Ken Kannappan, chief executive officer and president, who has returned to the helm full time after a medical leave of absence, said the slow economy continues to drag down the company’s core call center business, offsetting some of the strides the company has made in its rapidly growing unified communications segment.

The summer quarter is typically a slow one for the company, which typically enjoys brighter sales in the current quarter, and the timing of some deals had an impact on the final numbers of the quarter.

Still, the company continues to hold the leadership position in the emerging unified communications sector and has managed to grow that part of the business 36 percent during the year, Kannappan told analysts and investors in a conference call Tuesday.

“Our third quarter UC revenues are off to a solid start and the long-term fundamentals behind the UC opportunity remain as strong as ever,” Kannappan said. “We are widely recognized as the leader in market share and innovation.”

Mobile net revenues were also a high growth area during the quarter with an increase of 28 percent in the last year. Executives said they expect mobile revenues to jump again in the current third quarter, which includes holiday shoppers.

Kannappan returns

Kannappan started off the company’s financial report with a personal account of how he is fairing medically. The chief executive said he was back at the company full time and had assumed his duties again.

“My doctors believe that the cancer for which I took my medical leave in April has been successfully treated,” he said. With a gravely voice, likely related to treatment, he thanked his colleagues for shouldering the company’s tasks during his absence and told investors and analysts that he looked forward to seeing them when he resumes his normal travel schedule. “I’m on the path to complete recovery.”

Litigation

In other company business, Pam Strayer, senior vice president and chief financial officer, said the company is gearing up for a costly legal battle as it defends a federal suit filed by GN Netcom alleging monopolization and other business-related claims. GN claims that Plantronics dominates the market for headsets sold into contact centers in the U.S. and is controlling distributors through illegal exclusivity contracts. On Tuesday, Strayer estimated that company would spend more than $1 million in the third quarter on the defense.

“The GN lawsuit has recently entered the discovery phase and the impact to operating income from the associated legal expenses is particularly difficult to forecast.”

The company spent about $3 million on increasing head-count and annual merit increases during the second quarter. Strayer said the company was also planning to increase expenditures in sales and marketing.

Follow Sentinel correspondent Jennifer Pittman at Twitter.com/jenniferpittman

AT A GLANCE

Plantronics Inc.
WHAT: A publicly held telephone and computer headset manufacturer.
HEADQUARTERS: 345 Encinal St., Santa Cruz, CA 95060.
BACKGROUND: Founded in 1961, Plantronics introduced the first lightweight communications headset in 1962.
LEADERSHIP: Ken Kannappan, president and chief executive officer.
EMPLOYEES: The company employs more than 3,500 people globally, including about 510 in Santa Cruz.
INFORMATION: 831-426-5858; www.plantronics.com.
STOCK PRICE: Shares trading on the NYSE under the ticker PLT closed Tuesday at $49.38, up 57 cents. The 52-week range is $30.90-$49.84.

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This entry was posted on October 29, 2013 by in Business, Technology.

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