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Polycom Reports First Quarter 2010 Earnings

Q1 Revenue Growth of 23 Percent Year-over-Year to a Record $276 Million

(PresseBox) (London/Slough, UK and Pleasonton, U.S., ) Polycom, Inc. (Nasdaq: PLCM), the global leader in telepresence, video and voice communications solutions, today reported its earnings for the first quarter ended March 31, 2010.

First quarter 2010 consolidated net revenues were a record $276 million, compared to $225 million for the first quarter of 2009. GAAP net income for the first quarter of 2010 was $5 million, or 6 cents per diluted share, compared to $8 million, or 10 cents per diluted share, for the same period last year.

Non-GAAP net income for the first quarter of 2010 was $25 million, or 29 cents per diluted share. This compares to Non-GAAP net income of $23 million, or 27 cents per diluted share, for the first quarter of 2009.

The reconciliation between GAAP net income and Non-GAAP net income is provided in the tables at the end of this release.

On a product line basis, consolidated net revenues for the first quarter of 2010 were comprised of:

- 69 percent video solutions, or $189 million (53 percent video communications, or $146 million, and 16 percent network systems, or $43 million); and
- 31 percent voice communications, or $87 million.

On a product line basis, consolidated net revenues for the first quarter of 2009 were comprised of:

- 69 percent video solutions, or $156 million (55 percent video communications, or $124 million, and 14 percent network systems, or $32 million); and
- 31 percent voice communications, or $69 million.

"We believe Polycom's improving growth trajectory, particularly over the past two quarters, validates the key thesis points of our strategic investment plan. Specifically, Polycom generated record revenues in the first quarter of 2010, the Company's fourth consecutive quarter of sequential growth and second consecutive quarter of growth on a yearoveryear basis," said Robert Hagerty, Polycom chairman and CEO. "In particular, we have already gained significant traction with our gotomarket initiative, recruiting top talent and increasing productivity at higher than anticipated rates. Also, although early in the cycle, we are beginning to see positive results from our new strategic partnerships. We also announced a new relationship with HP that promises to yield significant customer wins over the coming quarters. In fact, we see the Polycom Open Collaboration Network as a key mechanism to galvanise the growth of our integrated and unparalleled solution."

"Product innovation also continued at a fast pace in the first quarter of 2010. For instance, we announced breakthroughs in both the user experience of our HD video solutions and in reducing the total cost of ownership (TCO). With our new H.264 High Profile software, we have cut the bandwidth requirements for 1080p HD video approximately in half, dramatically improving TCO for our customers and further enhancing the already robust return on investment of our solutions. Finally, we gained US government UC APL certification for our RMX network platform and we launched our CMA Desktop video solution for the Apple Mac. Bottom line, we have an extraordinary team, our execution against the strategic investment plan is ontarget, and we believe we are positioned well to seize the tremendous market opportunity in the unified collaboration space over time," concluded Hagerty.

"In the first quarter, strong customer demand drove sharp yearoveryear growth in revenues, backlog and deferred revenues," said Michael Kourey, Polycom senior vice president, finance and administration, and CFO. "As a result of this strong operating performance and working capital management, we generated positive operating cash flow of $21 million, representing Polycom's 49th consecutive quarter of positive operating cash flow. We exited Q1 with $470 million in cash and investments and no debt."

Polycom Germany GmbH

Polycom, Inc. (Nasdaq: PLCM) is the global leader in telepresence, video, and voice solutions and a visionary in communications that empower people to connect and collaborate everywhere. Please visit www.polycom.com for more information.

This release contains forwardlooking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 regarding future events, future demand for our products, and the future performance of the Company, including statements regarding the validation of and future execution against the Company's strategic investment plan and new strategic partnerships, expected customer wins from our new strategic partnerships, including the recentlyannounced HP relationship, the Polycom Open Collaboration Network as a means of stimulating future growth of our solution, and the Company as being well positioned to capture the market opportunity in the Unified Collaboration space. These forwardlooking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the fact that the Company's strategic investment plan may not yield the intended results or may take longer than originally anticipated to achieve such results, the impact of competition on our product sales and for our customers and partners, the impact of increased competition due to consolidation in our industry or competition from companies that are larger or that have greater resources than we do, potential fluctuations in results and future growth rates, risks associated with general economic conditions, the market acceptance of Polycom's products and changing market demands, including demands for differing technologies or product and services offerings, possible delays in the development, availability and shipment of new products, increasing costs and differing uses of capital, changes in key personnel and our sales organization that may cause disruption to the business, the impact of recent restructuring actions, and the impact of global conflicts such as those in the Middle East that may adversely impact our business. Many of these risks and uncertainties are discussed in the Company's Annual Report on Form 10-K for the year ended Dec. 31, 2009, and in other reports filed by Polycom with the SEC. Polycom disclaims any intent or obligations to update these forwardlooking statements.

To supplement our consolidated financial statements presented on a GAAP basis, Polycom uses non-GAAP measures of operating results, net income and income per share, which are adjusted to exclude certain costs, expenses, gains and losses we believe appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our current period GAAP results are made with the intent of providing both management and investors a more complete understanding of Polycom's underlying operational results and trends and our marketplace performance. For example, the non-GAAP results are an indication of our baseline performance before gains, losses or other charges that are considered by management to be outside of our core operating results. In addition, these adjusted non-GAAP results are among the primary indicators management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net income or diluted net income per share prepared in accordance with generally accepted accounting principles in the United States.

Polycom reserves the right to modify future product plans at any time. Products and/or related specifications referenced in this press release are not guaranteed and will be delivered on a when and if available basis.