Polycom (News - Alert) has agreed to sell its enterprise wireless solutions business to an affiliate of private equity firm, Sun Capital Partners, for approximately $110 million in cash, giving the telepresence company more room to focus on its unified communications and video collaboration business.
The decision to divest its cordless phone business is a "logical next step" in Polycom's push to extend the reach of its RealPresence Platform, as well as an opportunity for the wireless unit to thrive as a standalone company, remarked Andy Miller, president and CEO of Polycom.
"This is a good and not surprising move for Polycom, as it allows them to concentrate their energy and resources on the core, strategic components of their business in order to drive further innovation and adoption of video collaboration," said Rich Costello, IDC (News - Alert) senior research analyst.
Polycom will use the new influx of cash to increase its share repurchase authorization program by roughly $104 million. The move is a clear effort by the videoconferencing company to boost investor confidence following a difficult fiscal quarter in which Polycom shares dropped to a near two-year low, according to the Wall Street Journal.
The stock has plummeted nearly 59 percent over the last year due to the emergence of smaller telepresence providers, which have stolen market share from the likes of Polycom and Cisco (News - Alert) with more mobile and flexible videoconferencing solutions. Polycom rivals have been aided with the influx of tablets and lightweight ultrabooks, enabling smaller vendors to deliver HD video conferencing to the mobile masses.
Polycom's enterprise wireless solutions business generated revenues of $94 million in calendar year 2011, powered by sales of its Wi-Fi and DECT (News - Alert) handsets. The company has adjusted its second quarter earnings forecast to 18 to 20 cents per share to reflect deal. Polycom initially anticipated Q2 earnings to fall between 20 and 22 cents per share.
Prior to the deal, Polycom's share repurchase authorization program had only $78 million remaining.
Edited by Brooke Neuman