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Polycom, Dr. Reddy's in a Deal

Zacks Equity Research

Polycom, Inc. (PLCM) has agreed to offer its popular Polycom immersive video collaboration solutions to India-based pharmaceutical company – Dr. Reddy’s Laboratories Limited. The deal also entails Dr. Reddy’s to the Polycom RealPresence Experience (RPX) solution by the leading video and audio conferencing equipment and related network infrastructure provider.

Polycom’s video conferencing technology will bridge the gap between the employees of Dr. Reddy’s Hyderabad and New Jersey offices through direct communication. Moreover, availability of RealPresence applications on iOS and Android platforms will enable employees in the two parts of the world to attend meetings.

Polycom’s RPX technology will help the co-workers of both the corporate offices to view drug and generic samples and get feedbacks without delay. Such technology implemented by Dr. Reddy’s Laboratories will not only save time for the employees but also reduce traveling expenses.

At present, Polycom is undergoing a transition from hardware-centric to cloud and software-centric business model. The company has formed a consortium of open video exchange cloud with 14 leading telecom service providers across the world. Notable among them are Verizon Communication Inc. (VZ) and AT&T Inc. (T). This consortium will deliver business-to-business (B2B) video conferencing through the cloud network.

In the recently concluded first quarter, Polycom outperformed, with both the top and the bottom line beating the respective Zacks Consensus Estimate. Despite a 2% year-over-year decline in the overall revenues, the American region reported a 3% increase in revenues.

The corporate video conferencing business is mainly dominated by Cisco (CSCO). Thus, we believe that winning such strategic deals will help Polycom to register revenue growth as well as to retain its market position, going forward.

Currently, Polycom carries a Zacks Rank #2 (Buy).

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