Polycom (PLCM) 8-K Polycom Reports First Quarter Earnings

Exhibit 99.1

Contact:	Michael R. Kourey, CFO
	Polycom, Inc.
	925-924-5742
	mkourey@polycom.com

POLYCOM REPORTS FIRST QUARTER EARNINGS

Revenues of $192.7M;

Revenue Growth of 22 Percent Year-Over-Year

PLEASANTON, Calif.—April 26, 2007—Polycom, Inc. (NASDAQ: PLCM), the world’s leading provider of unified collaborative communications solutions, today reported its earnings for the first quarter ended March 31, 2007. As previously announced, the acquisition of SpectraLink Corporation was completed on March 26, 2007, and the financial results announced today include the results of SpectraLink’s operations from March 26 through March 31, 2007. As the acquisition closed late in the quarter, the impact on our Non-GAAP financial results was not material.

First quarter 2007 consolidated net revenues were $192.7 million, compared to $157.7 million for the first quarter of 2006. SpectraLink contributed $2.1 million to net revenues for the first quarter of 2007. Non-GAAP net income in the first quarter of 2007 was $28.6 million, or 30 cents per diluted share, including an insignificant net loss related to SpectraLink for the six day period. This compares to Non-GAAP net income of $19.8 million, or 22 cents per diluted share, for the first quarter of 2006. Non-GAAP financial measures exclude stock-based compensation expense, the effect of stock-based compensation expense on warranty rates, impact to cost of sales from purchase accounting adjustments to inventory, acquisition-related costs, purchased in-process research and development costs, amortization and impairment of purchased intangibles, restructuring costs, litigation reserves and payments, gain (loss) on strategic investments, and the income tax effect of the preceding adjustments. GAAP net income for the first quarter of 2007 was $10.2 million, or 11 cents per diluted share, compared to $14.0 million, or 16 cents per diluted share, for the same period last year. GAAP net income for the first quarter of 2007 includes charges related to the acquisition of Spectralink of $9.6 million, or 10 cents per share.

The reconciliation of the GAAP statement of operations to the respective Non-GAAP statement of operations, for the three months ended March 31, 2007 and 2006, is set forth at the end of this press release. Separately, note that the purchase price allocation for the SpectraLink acquisition was completed using information currently available. Polycom may adjust the GAAP preliminary purchase price allocation after obtaining more information regarding, among other things, asset valuations, liabilities assumed, and revisions of preliminary estimates.

On a product line basis, consolidated net revenues for the first quarter of 2007 were comprised of 56 percent video communications, or $108.0 million; 29 percent voice communications, or $56.1 million; and 15 percent network systems, or $28.6 million. This compares to the first quarter of 2006, in which consolidated net revenues were comprised of 53 percent video communications, or $83.1 million; 26 percent voice communications, or $40.8 million; and 21 percent network systems, or $33.8 million.

“Voice and video over IP (V²oIP) is making true collaboration a reality for businesses and public organizations at unprecedented levels,” said Robert Hagerty, president and CEO. “Enabled by ramping IP connectivity, Polycom video collaboration solutions have now expanded to include high definition (HD) video and telepresence—new technology vectors that are driving deeper adoption and opening customer applications. In Q1, we announced the launch of our new RMX 2000^™ real-time media conferencing platform. The RMX 2000 is a flexible new architecture that delivers on-demand, multimedia conferencing for the desktop, meeting rooms, and the mobile professional. This new RMX platform addresses the growing network demand for broad HD and standard definition deployments—all

with a simple end-user and IT management interface that is easy to use. We expect the RMX to be a meaningful contributor to Polycom’s network systems revenues this year.”

Hagerty continued, “At the end of the first quarter, we made a key, strategic acquisition by adding SpectraLink and its leading Voice over Wi-Fi solution to our strong organic growth engine. Mobility is a rapidly-growing market opportunity, and SpectraLink’s wireless product lines leverage the success of our SoundPoint^® IP voice over IP desktop phones into the mobility environment. This addition enables Polycom to deliver compelling fixed and mobile V²oIP solutions for our customers and to capture significant synergies through our strategic partnerships, channels, and our global sales force. With the SpectraLink transaction closing more quickly than anticipated, we believe we are well positioned to capture the significant customer and financial benefits of this transaction within the year.”

“Polycom’s revenues grew organically 20 percent year-over-year in the first quarter, and 22 percent, including our acquisition of Destiny Conferencing at the beginning of the quarter, and six days of SpectraLink results,” said Michael Kourey, senior vice president, finance and administration, and CFO. “This organic growth was fueled by strength in both our video and voice product lines, with video growth accelerating to 30 percent year-over-year. Also, with the efficient close of the SpectraLink acquisition, we have already transitioned the SpectraLink product lines to Polycom’s linearity model—contributing to our record backlog and deferred revenues of $47.8 million and $71.8 million, respectively.”

About Polycom

Polycom, Inc. is the worldwide leader in unified collaborative communications (UCC) that maximize the efficiency and productivity of people and organizations by integrating the broadest array of high definition video, wired and wireless voice, and content solutions to deliver the ultimate collaborative experience. Polycom’s high quality, standards-based conferencing and collaboration solutions are easy to deploy and manage, as well as intuitive to use. Supported by an open architecture, they integrate seamlessly with leading telephony, workplace wireless telephony, and presence-based networks. With its market-driving technologies, best-in-class products, alliance partnerships, and world-class service, Polycom is the smart choice for organizations seeking proven solutions and a competitive advantage from on-demand communications and collaboration. For additional information, call 800-POLYCOM or visit the Polycom web site at www.polycom.com.

This release contains forward-looking 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 RMX as a meaningful contributor to network systems revenues this year and Polycom as being well positioned to capture significant customer and financial benefits of the SpectraLink transaction within the year. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the impact of competition on our product sales and for our customers and partners, our ability to rapidly and effectively integrate SpectraLink and its operations, potential fluctuations in results and future growth rates, the market acceptance of Polycom’s products, such as our voice and video over IP products, HD products, and RMX 2000 platform, 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, challenges associated with integrating acquired companies, changes in key personnel, the impact of global conflicts such as those in the Middle East, and risks associated with changes in general economic conditions. Many of these risks and uncertainties are discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, and in other reports filed by Polycom with the SEC. Polycom disclaims any intent or obligations to update these forward-looking statements.

As has been noted on the Company’s web site since April 19, 2007, Polycom will hold a conference call today, April 26, 2007, at 5:00 p.m. EDT/2:00 p.m. PDT to discuss its first quarter earnings. Robert Hagerty, chairman, president and CEO, and Michael Kourey, chief financial officer, will host the conference. You may participate by viewing the webcast atwww.polycom.com or, for callers in the US and Canada, by calling 800-670-3537; and for callers outside of the US and Canada, by calling 212-676- 5289,

with the pass code being Polycom. A replay of the call will also be available atwww.polycom.com or, for callers in the US and Canada, at 800-633-8284; and for callers outside of the US and Canada, at 402-977-9140. The access number for the replay is 21336456. A replay of the call will also be maintained on our website atwww.polycom.com under Investor Relations—Archived Conference Calls for twelve months.

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.

Polycom, the Polycom logo, SpectraLink, the SpectraLink logo and SoundPoint are registered trademarks of Polycom and RMX 2000 is a trademark of Polycom in the U.S. and various countries.^©2007, Polycom, Inc. All rights reserved.

POLYCOM, INC.

Non-GAAP Condensed Consolidated Statements of Operations

Excluding Stock-based compensation expense, Effect of stock-based compensation expense on warranty rates, Impact to cost of sales from purchase accounting adjustments to inventory, Acquisition-related costs, Purchased in-process research and development costs, Amortization and impairment of purchased intangibles, Restructuring costs, Litigation reserves and payments, Gain (loss) on strategic investments, and Income tax effect of the preceding adjustments

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended
	March 31, 2007			March 31, 2006
Revenues:
Product revenues	$	169,472		$	138,668
Service revenues		23,246			19,045
Total revenues		192,718			157,713
Cost of revenues:
Cost of product revenues		62,381			50,106
Cost of service revenues		11,256			9,631
Total cost of revenues		73,637			59,737
Gross profit		119,081			97,976
Operating expenses:
Sales and marketing		48,412			38,735
Research and development		28,098			25,757
General and administrative		10,425			8,934
Total operating expenses		86,935			73,426
Operating income		32,146			24,550
Interest income, net		6,568			3,918
Other expense, net		(64	)		(136	)
Income before provision for income taxes		38,650			28,332
Provision for income taxes		10,049			8,500
Non-GAAP net income	$	28,601		$	19,832
Basic net income per share	$	0.31		$	0.23
Diluted net income per share	$	0.30		$	0.22
Weighted average shares outstanding for basic net income per share		90,807			88,078
Weighted average shares outstanding for diluted net income per share		94,988			89,346

Use of Non-GAAP Financial Information

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 and are excluded by management for purposes of internal budgets and making operational decisions. 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, INC.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended
	March 31, 2007			March 31, 2006
Revenues:
Product revenues	$	169,472		$	138,668
Service revenues		23,246			19,045
Total revenues		192,718			157,713
Cost of revenues:
Cost of product revenues		64,282			50,454
Cost of service revenues		11,899			10,035
Total cost of revenues		76,181			60,489
Gross profit		116,537			97,224
Operating expenses:
Sales and marketing		50,936			40,175
Research and development		30,675			27,523
General and administrative		12,476			10,177
Acquisition-related costs		1,170			45
Purchased in-process research and development		9,400			—
Amortization of purchased intangibles		1,431			1,588
Restructuring costs		213			555
Total operating expenses		106,301			80,063
Operating income		10,236			17,161
Interest income, net		6,568			3,918
Other expense, net		(64	)		(136	)
Income before provision for income taxes		16,740			20,943
Provision for income taxes		6,529			6,911
Net income	$	10,211		$	14,032
Basic net income per share	$	0.11		$	0.16
Diluted net income per share	$	0.11		$	0.16
Weighted average shares outstanding for basic net income per share		90,807			88,078
Weighted average shares outstanding for diluted net income per share		94,988			89,346

POLYCOM, INC.

GAAP to Non-GAAP Reconciliation

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended
	March 31, 2007
	GAAP			Excluded			Non-GAAP
Revenues:
Product revenues	$	169,472		$	—		$	169,472
Service revenues		23,246			—			23,246
Total revenues		192,718			—			192,718
Cost of revenues:
Cost of product revenues		64,282			1,901	(a)(b)(c)		62,381
Cost of service revenues		11,899			643	(d)		11,256
Total cost of revenues		76,181			2,544			73,637
Gross profit		116,537			(2,544	)		119,081
Operating expenses:
Sales and marketing		50,936			2,524	(d)		48,412
Research and development		30,675			2,577	(d)		28,098
General and administrative		12,476			2,051	(d)		10,425
Acquisition-related costs		1,170			1,170			—
Purchased in-process research and development		9,400			9,400			—
Amortization and impairment of purchased intangibles		1,431			1,431			—
Restructuring costs		213			213			—
Total operating expenses		106,301			19,366			86,935
Operating income		10,236			(21,910	)		32,146
Interest income, net		6,568			—			6,568
Other expense, net		(64	)		—			(64	)
Income before provision for income taxes		16,740			(21,910	)		38,650
Provision for income taxes		6,529			(3,520	)		10,049
Net income	$	10,211		$	(18,390	)	$	28,601
Basic net income per share	$	0.11		$	(0.20	)	$	0.31
Diluted net income per share	$	0.11		$	(0.19	)	$	0.30
Weighted average shares outstanding for basic net income per share		90,807						90,807
Weighted average shares outstanding for diluted net income per share		94,988						94,988

(a) Excluded amount includes $811 related to the amortization of purchased intangibles for core and existing technologies.

(b) Excluded amount includes $526 for stock-based compensation expense recorded in accordance with SFAS 123R, “Share-Based Payment” during the period and $169 related to the effect of stock-based compensation on warranty expense rates.

(c) Excluded amount includes $395 related to purchase accounting adjustments made to inventory.

(d) Excluded amount represents stock-based compensation expense recorded in accordance with SFAS 123R, “Share-Based Payment” during the period.

POLYCOM, INC.

GAAP to Non-GAAP Reconciliation

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended
	March 31, 2006
	GAAP			Excluded			Non-GAAP
Revenues:
Product revenues	$	138,668		$	—		$	138,668
Service revenues		19,045			—			19,045
Total revenues		157,713			—			157,713
Cost of revenues:
Cost of product revenues		50,454			348			50,106
Cost of service revenues		10,035			404			9,631
Total cost of revenues		60,489			752			59,737
Gross profit		97,224			(752	)		97,976
Operating expenses:
Sales and marketing		40,175			1,440			38,735
Research and development		27,523			1,766			25,757
General and administrative		10,177			1,243			8,934
Acquisition-related costs		45			45			—
Purchased in-process research and development		—			—			—
Amortization and impairment of purchased intangibles		1,588			1,588			—
Restructuring costs		555			555			—
Total operating expenses		80,063			6,637			73,426
Operating income		17,161			(7,389	)		24,550
Interest income, net		3,918			—			3,918
Other expense, net		(136	)		—			(136	)
Income before provision from income taxes		20,943			(7,389	)		28,332
Provision for income taxes		6,911			(1,589	)		8,500
Net income	$	14,032		$	(5,800	)	$	19,832
Basic net income per share	$	0.16		$	(0.07	)	$	0.23
Diluted net income per share	$	0.16		$	(0.06	)	$	0.22
Weighted average shares outstanding for basic net income per share		88,078						88,078
Weighted average shares outstanding for diluted net income per share		89,346						89,346

POLYCOM, INC.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

	March 31, 2007		December 31, 2006
ASSETS
Current assets
Cash and cash equivalents	$	190,618	$	316,368
Investments		101,654		157,345
Trade receivables, net		102,629		79,057
Inventories		69,943		48,029
Deferred taxes		42,400		22,459
Prepaid expenses and other current assets		19,888		16,719
Total current assets		527,132		639,977
Property and equipment, net		54,654		39,426
Long-term investments		83,111		102,133
Goodwill		492,241		356,755
Purchased intangibles, net		105,508		12,935
Deferred taxes		39,745		16,746
Other assets		22,326		22,043
Total assets	$	1,324,717	$	1,190,015
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	83,198	$	53,602
Accrued payroll and related liabilities		23,109		22,182
Taxes payable		2,107		58,092
Deferred revenue		48,999		40,227
Other accrued liabilities		49,856		39,780
Total current liabilities		207,269		213,883
Non-current liabilities
Deferred revenue		22,824		20,798
Taxes payable		36,247		—
Deferred taxes		37,229		—
Other non-current liabilities		9,094		8,614
Total non-current liabilities		105,394		29,412
Total liabilities		312,663		243,295
Stockholders' equity		1,012,054		946,720
Total liabilities and stockholders' equity	$	1,324,717	$	1,190,015

POLYCOM, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Three Months Ended
	March 31, 2007			March 31, 2006
Cash flows from operating activities:
Net income	$	10,211		$	14,032
Adjustments:
Depreciation and amortization		5,458			5,152
Amortization and impairment of purchased intangibles		2,242			1,588
Provision for doubtful accounts		—			59
Provision for excess and obsolete inventories		237			45
Non-cash stock based compensation		8,321			5,201
Excess tax benefits from stock-based compensation		(8,665	)		—
Purchase of in-process research and development		9,400			—
Loss on disposals of property and equipment		23			7
Changes in assets and liabilities, net of the effect of acquisitions:
Trade receivables		(5,848	)		(4,770	)
Inventories		(2,463	)		1,062
Deferred taxes		3,093			—
Prepaid expenses and other assets		(2,124	)		52
Accounts payable		(410	)		(3,724	)
Taxes payable		4,066			(536	)
Other accrued liabilities		(6,694	)		7,913
Net cash provided by operating activities		16,847			26,081
Cash flows from investing activities:
Purchase of property and equipment		(5,945	)		(4,037	)
Purchases of investments		(123,461	)		(172,599	)
Proceeds from sale and maturity of investments		197,565			164,279
Net cash paid in purchase acquisitions		(254,725	)		—
Net cash used in investing activities		(186,566	)		(12,357	)
Cash flows from financing activities:
Proceeds from issuance of common stock under employee option and stock purchase plans		35,304			13,711
Repurchase of common stock		—			(52,405	)
Excess tax benefits from stock-based compensation		8,665			—
Net cash provided by (used in) financing activities		43,969			(38,694	)
Net decrease in cash and cash equivalents		(125,750	)		(24,970	)
Cash and cash equivalents, beginning of period		316,368			189,271
Cash and cash equivalents, end of period	$	190,618		$	164,301