Polycom shares dive after 2nd-quarter earnings show slowdown in video business

Polycom shares dive after 2Q earnings

NEW YORK — Polycom Inc. shares tumbled Friday, at least in part over concerns about a slowdown in its video communications business.

THE SPARK: Polycom, which makes communications and video conferencing equipment, reported second-quarter results after the market close Thursday that topped Wall Street expectations. But revenue from its video business declined from the prior quarter for the second time in a row.

THE ANALYSIS: “The deceleration in network systems is concerning … as we view this segment of the business as a leading indicator of future performance,” Wedbush analyst Rohit Chopra told clients in a note.

He added, “Current weakness suggests that the company may not be penetrating both new and existing accounts as one might have expected given the substantial strategic investments in sales and marketing over the last few quarters.”

Chopra kept a “Neutral” rating on the stock and cut his price target for shares to $32 from $33.

SHARE ACTION: Polycom shares were down $2.98, or 9.3 percent, to $29.03 in afternoon trading.