RADVISION Reports Better Than Expected First Quarter 2012 Results

TEL AVIV, May 14, 2012 – RADVISION (Nasdaq: RVSN), a leading technology and end-to-end solution provider for unified visual communications, reported today that revenues for the first quarter of 2012 were $17.4 million. This compares with revenues of $20.8 million in the first quarter of 2011.

The operating loss for the first quarter of 2012 was $7.5 million on a GAAP basis and $5.5 million on a non-GAAP basis.  For the first quarter of 2011, the operating loss was $3.5 million on a GAAP basis, and $2.6 million on a non-GAAP basis.

The net loss for the first quarter of 2012 was $6.7 million, or $0.36 per diluted share, on a GAAP basis, and $5.4 million, or $0.29 per diluted share, on a non-GAAP basis.  In the first quarter of 2011, the net loss was $3.3 million, or $0.18 per diluted share, on a GAAP basis, and $2.4 million, or $0.13 per diluted share, on non-GAAP basis.

The non-GAAP amounts in the first quarter of 2012 exclude $1.2 million of merger costs related to the acquisition of RADVISION by Avaya, which was approved by RADVISION shareholders on April 30, 2012.  Also excluded are income of $0.6 million for prior year’s tax adjustments, $0.4 million of amortization of purchased intangibles, $0.4 million for the effects of stock-based compensation expense in accordance with ASC 718, and income of $0.1 million due to the other than temporary impairment of certain Auction Rate Securities. The total amount excluded for non-GAAP purposes was $1.2 million, equivalent to $0.07 per diluted share.

The non-GAAP amounts in the first quarter of 2011 exclude $0.5 million of expense for amortization of purchased intangibles, $0.5 million for the effects of stock-based compensation expense, and a loss of $0.01 million due to the other than temporary impairment of certain Auction Rate Securities. The total amount excluded for non-GAAP purposes was $1.0 million, equivalent to $0.05 per diluted share.

For the first quarter of 2012, total revenues consisted of $15.2 million for the Video Business Unit (VBU) and $2.2 million for the Technology Business Unit (TBU).  This compares with $15.9 million for the VBU and $4.8 million for the TBU reported in the first quarter of 2011.

The Company’s guidelines for the first quarter of 2012 as reported on February 8, 2012 and updated on April 4, 2012 were for revenues of approximately $17.0 million, a non-GAAP operating loss of $6.9 million, and a net loss of $0.47 to $0.49 per diluted share on a GAAP basis, and $0.37 per diluted share on a non-GAAP basis.

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

The Company ended the first quarter of 2012 with approximately $89.5 million in cash and liquid investments, equivalent to $4.82 per basic share, a decrease of $1.1 million from December 31, 2011. The decrease reflects $2.3 million used in operating activities and $0.3 million for capital expenditures offset by $1.5 million received from the exercise of options.

Boaz Raviv, Chief Executive Officer, commented: “Our Video Business Unit exceeded our expectations in the first quarter due to higher than expected sales of both our infrastructure and endpoint products.  This strong performance more than offset lower Technology Business Unit revenues.

“Over the past two years we have been successfully transforming RADVISION into an end-to-end videoconferencing solution provider with leading technology.  That transformation has continued in 2012.  In March, we debuted the first and the flagship product of our next generation video system, the SCOPIA XT5000. Designed for the high end market, the SCOPIA XT5000 is the most powerful HD video conferencing system in its class available on the market.  In April, we expanded our next generation HD video conferencing room system portfolio with the SCOPIA XT4200, which offers outstanding value and cost-effective HD video communications, especially suited for the smaller and mid-sized conference room.  We are gratified by the market response to our new portfolio.

“Since our founding in 1992, RADVISION has been a leading innovator in video communications technology.  We are excited to continue that tradition as part of Avaya, a leading global provider of business collaboration and communications solutions. By joining forces, we plan to create a very powerful force in the unified communications marketplace.”

The Company noted that RADVISION and Avaya expect their merger to be completed in the second quarter of 2012.

GAAP versus NON-GAAP Presentation

To supplement the consolidated financial statements presented in accordance with generally accepted accounting principles in the United States ("GAAP"), the Company uses non-GAAP measures of operating results, net income and earnings per share, which are adjusted from results based on GAAP to exclude other than temporary impairment of available for sale marketable securities, the expenses recorded for stock compensation in accordance with ASC 718, amortization of purchased intangibles, prior year’s tax adjustments and merger-related costs. These non-GAAP financial measures are provided to enhance overall understanding of the current financial performance and prospects for the future. Specifically, the Company believes the non-GAAP results provide useful information to both management, and investors as these non-GAAP results exclude other than temporary impairment of available for sale marketable securities, the expenses recorded for stock compensation in accordance with ASC 718, amortization of purchased intangibles, prior year’s tax adjustments and merger-related costs that the Company believes are not indicative of the core operating results. Further, these non-GAAP results are one of the primary indicators management uses for assessing the Company's performance, allocating resources and planning and forecasting future periods. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. These non-GAAP measures may be different from the non-GAAP measures used by other companies.

About RADVISION

Founded in 1992, RADVISION (Nasdaq: RVSN) is a leading provider of video conferencing and telepresence technologies over IP and wireless networks. RADVISION teams with its channel and service provider partners to offer end-to-end visual communications that help businesses collaborate more efficiently. RADVISION propels the unified communications evolution forward with unique technologies that harness the power of video, voice, and data over any network.

(Source: Radvision, BroadConnect Telecom, Avaya.BCT)

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Polycom to face painful, but necessary shift into software

* Hardware-based videoconferencing seeing reduced demand

* Videoconferencing increasingly moving to cloud-based software

* Polycom facing budget cuts, competition, restructuring

July 26 (Reuters) - Polycom Inc (PLCM.O) was a big beneficiary of the 2008 recession, as its videoconferencing products helped companies cut back executive travel, but the advantage has proven short-lived as cheaper rivals muscle in on its business.

The company is working on new cloud-based software products but analysts warn of a rocky couple of years while it makes a transition from selling expensive hardware.

Polycom is caught between Cisco Systems Inc (CSCO.O), which dominates sophisticated virtual conference rooms linking offices around the world, and free videoconference software such as Microsoft Corp's (MSFT.O) Skype and Apple Inc's APPL.O FaceTime.

Earnings are already being crunched . Polycom reported Tuesday a 77 percent drop in quarterly net income, as Europe's woes hit its business.

After two years when revenue growth topped 20 percent each, analysts see a 2.2 percent decline in sales this year, according to Thomson Reuters I/B/E/S.

The shares hit a three-year low of $7.45 on Wednesday, taking their decline to 78 percent from an 11-year high of $34.30 last year after the appointment of a new CEO. The stock edged up in morning trade on Thursday to $8.04.

"It's a tough time to be changing the company in this economy," said Ira Weinstein, an analyst at independent market research firm Wainhouse Research.

"I believe they will make the transition, but it will take time. It's not going to be as fast as (CEO Andy Miller) wants it to be."

The transition to a software-based model will pressure earnings over the next 12-18 months, Citi Investment Research wrote in a note on Wednesday.

High turnover of sales staff at the company's key North American market has added internal pressure to the big change job.

BIG CISCO

Polycom faces a leaner, more competitive Cisco, whose TelePresence has become the dominant choice in the corporate sector with double Polycom's market share.

"Cisco outnumbers them in every sales situation and has more brand recognition, so it's an unfair battle," said Weinstein. Graphic on Polycom vs Cisco.

Polycom said in an email to Reuters that it gained market share over Cisco in the first quarter of 2012, according to market research firms including IDC, but analysts don't see a major advance on the dominant player in tough times with so many internal changes.

"It's going to be very difficult to turn the company around with those headwinds hitting them all at once," Mizuho Securities USA analyst Joanna Makris said.

Polycom must embrace a cloud-based model to fend off the likes of Skype, she said.

"(Skype's) free. And in a bad macro, people like free," said Makris, who has a "neutral" rating on the Polycom stock.

Competition is also intensifying from smaller, privately held rivals like Vidyo, which recently received funding from Juniper Networks Inc (JNPR.N).

FIGHTBACK

Polycom is fighting back. The company, which still gets most of its revenue from hardware-based systems, is using a software solution to target smaller businesses, including videoconferencing apps for mobile devices.

It has made a slew of small purchases to boost its web presence, including ViVu, a maker of software to embed videoconferencing in websites and the videoconferencing business of Hewlett-Packard Co (HPQ.N).

The software model has potential as companies can only afford a few expensive videoconferencing rooms but a software-based solution could be used to equip thousands of employees.

Videoconferencing companies, used to shipping hundreds of thousands of units for thousands of dollars, will have to get used to shipping tens of millions of units for much less each, Gartner analyst Scott Morrison said.

"That's not an easy transition to make for any organization and Polycom is not unique," he said.

As well, Polycom, as a standalone videoconferencing firm, will always be dependent for corporate sales on partners including it in their telecommunications offerings.

That introduces more risk, as Skype-owner Microsoft is a key user of Polycom products in its Lync corporate video, email and messaging product.

Polycom hasn't disclosed how much it gets from Microsoft but has acknowledged in its annual report the risk that its products could be replaced by Skype.

"If Microsoft integrates Skype into Lync then it is really game over for Polycom," Makris said.

The Mizuho analyst said in a post-earnings note that Polycom's outlook was disappointing and reflected a product and organizational changes that would take several quarters to execute.

Polycom said Tuesday it continued to restructure its North American business after appointing four new area vice presidents earlier this year.

It said David Ruggiero, its president for North America, would be leaving and it would reorganize its U.S. government sector units into a new "public sector" business. [ID:nL4E8IO328]

( Source: By Sayantani Ghosh http://in.reuters.com/article/2012/07/26/idINL4E8IN4R520120726 )

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