Polycom (PLCM) 8-K Polycom Reports First Quarter 2009 Earnings

Exhibit 99.1

Investor Contact:	Michael R. Kourey, CFO
	Polycom, Inc.
	925-924-5742
	mkourey@polycom.com
Press Contact:	Caroline Japic
	Polycom, Inc.
	408-474-2265
	caroline.japic@polycom.com

POLYCOM REPORTS FIRST QUARTER 2009 EARNINGS

Telepresence Revenues Grew 45 percent Year-over-Year;

Network Systems Revenues Grew 10 percent Year-over-Year

PLEASANTON, Calif. – April 15, 2009 – Polycom, Inc. (NASDAQ: PLCM), the global leader in telepresence, video and voice communications solutions, today reported its earnings for the first quarter ended March 31, 2009.

First quarter 2009 consolidated net revenues were $225.4 million, compared to $258.9 million for the first quarter of 2008. Non-GAAP net income for the first quarter of 2009 was $22.5 million, or 27 cents per diluted share. This compares to Non-GAAP net income of $32.7 million, or 36 cents per diluted share, for the first quarter of 2008. GAAP net income for the first quarter of 2009 was $8.0 million, or 10 cents per diluted share, compared to $14.2 million, or 16 cents per diluted share, for the same period last year.

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

On a product line basis, including applicable service revenues, consolidated net revenues for the first quarter of 2009 were comprised of:

• 69 percent video solutions, or $156.4 million (55 percent video communications, or $124.3 million, and 14 percent network systems, or $32.1 million); and

• 31 percent voice communications, or $69.0 million.

This compares to the first quarter of 2008, in which consolidated net revenues were comprised of:

• 62 percent video solutions, or $159.5 million (51 percent video communications, or $130.3 million, and 11 percent network systems, or $29.2 million); and

• 38 percent voice communications, or $99.4 million.

“Although we experienced the challenges of the current economic environment in the first quarter, we believe the core drivers of our business remain strong,” said Robert Hagerty, Polycom chairman and CEO. “Now, more than ever, our customers are sensitive to discretionary spending and are increasingly focused on solutions that drive a hard-dollar return on investment (ROI) to improve their bottom line. We are fulfilling this need, as evidenced by customer adoption of Polycom’s highly-differentiated RPX and TPX solutions, driving 45 percent growth in our telepresence business, to a record level for us. Also, fueled by our wave of new network infrastructure products, Polycom’s network systems product line returned to double-digit, year-over-year growth. One of the factors offsetting this growth was our performance in the voice business, which continues to be adversely impacted by the economic downturn. However, the voice business continues to perform well competitively and remains integral to our Unified Collaboration (UC) solution, and we expect this business to return to growth as the economy improves.”

“Looking forward, we expect our broad range of new products to expand our market opportunity and to enable us to make competitive gains in our video solutions business. Our customers continue to tell us that videoconferencing, telepresence and network infrastructure solutions are critical in reducing costs and managing their business during this challenging time. For example, with our recent launch of the Polycom^® RMX 2000™ Version 4.0, the Polycom Converged Management Application (CMA™), and the Polycom Distributed Media Application (DMA™) solutions, we believe Polycom has now surpassed all competitive technologies to manage video-centric networks, providing extensive benefits to our customers. In fact, our DMA solution is the first media server virtualization product in the UC market, enabling exceptional management, scalability and reliability for our customers’ UC environments. In addition, through our strategic partnership with Microsoft, we jointly introduced the CX5000, a room-based video system that leverages Microsoft’s Office Communications Server 2007 and Live Meeting Service. Lastly, we launched the Polycom QDX™ 6000 and the Polycom VVX™ 1500 video products, designed to broaden our offering at the desktop and throughout organizations of all sizes,” Hagerty concluded.

“We executed prudent cost controls during the quarter by proactively aligning our cost structure to the current economic climate,” said Michael Kourey, Polycom senior vice president, finance and administration, and CFO. “As a result, we achieved a solid operating margin in spite of the revenue challenges. In addition, driven by our strong profits and working capital management, we generated $26.8 million in positive operating cash flow, our 45^th consecutive quarter of positive operating cash flow. We exited the quarter with a robust balance sheet, including $338.7 million in cash and investments and no debt.”

About Polycom

Polycom, Inc. (NASDAQ: PLCM) is the global leader in telepresence, video, and voice solutions and a visionary in communications that empower people to connect and collaborate everywhere. Please visitwww.polycom.com for more information.

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 the strength of the core drivers of our business, the return to growth of our voice business, the expected expansion of our market opportunity and competitive gains in our video solutions business due to our new product offerings and our surpassing of competitive technologies with respect to managing video-centric networks. 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, potential fluctuations in results and future growth rates, risks associated with general economic conditions, including the continuation and prolonged impact of the crisis in the worldwide financial markets and the global recession, the market acceptance of Polycom’s products 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, changes in key personnel and our sales organization and the impact of recent restructuring actions, and the impact of global conflicts such as those in the Middle East that may adversely impact our business. Many of these risks and uncertainties are discussed in the Company’s Annual Report on Form 10-K for the year ended Dec. 31, 2008, 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 8, 2009, Polycom will hold a conference call today, April 15, 2009, at 5:00 p.m. EDT/2:00 p.m. PT to discuss its first quarter earnings. Robert Hagerty, chairman, president and CEO, and Michael Kourey, chief financial officer, will host the

conference call. You may participate by viewing the webcast atwww.polycom.com or, for callers in the US and Canada, by calling 800.913.1647; and for callers outside of the US and Canada, by calling 212.231.2900, with the passcode 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 21420413. A replay of the call will also be maintained on our website for twelve months atwww.polycom.com under Investor Relations – Earnings Calls-Archives.

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.

^© 2009 Polycom, Inc. All rights reserved. POLYCOM^®, the Polycom “Triangles” logo and the names and marks associated with Polycom’s products are trademarks and/or service marks of Polycom, Inc. and are registered and/or common law marks in the United States and various other countries. All other trademarks are property of their respective owners.

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, 2009			March 31, 2008
Revenues:
Product revenues	$	183,294		$	222,451
Service revenues		42,116			36,469
Total revenues		225,410			258,920
Cost of revenues:
Cost of product revenues		72,971			85,693
Cost of service revenues		19,716			17,184
Total cost of revenues		92,687			102,877
Gross profit		132,723			156,043
Operating expenses:
Sales and marketing		64,333			70,691
Research and development		26,580			32,020
General and administrative		11,714			12,726
Total operating expenses		102,627			115,437
Operating income		30,096			40,606
Interest income, net		515			3,186
Other expense, net		(796	)		1,060
Income before provision for income taxes		29,815			44,852
Provision for income taxes		7,305			12,110
Non-GAAP net income	$	22,510		$	32,742
Basic net income per share	$	0.27		$	0.37
Diluted net income per share	$	0.27		$	0.36
Weighted average shares outstanding for basic net income per share		83,625			88,526
Weighted average shares outstanding for diluted net income per share		84,250			90,247

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. 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, 2009			March 31, 2008
Revenues:
Product revenues	$	183,294		$	222,451
Service revenues		42,116			36,469
Total revenues		225,410			258,920
Cost of revenues:
Cost of product revenues		78,007			90,187
Cost of service revenues		20,469			18,254
Total cost of revenues		98,476			108,441
Gross profit		126,934			150,479
Operating expenses:
Sales and marketing		66,233			73,861
Research and development		28,453			34,934
General and administrative		13,589			14,894
Acquisition-related costs		—			159
Amortization of purchased intangibles		1,464			1,827
Restructuring costs		6,417			3,615
Litigation reserves and payments		—			6,238
Total operating expenses		116,156			135,528
Operating income		10,778			14,951
Interest income, net		515			3,186
Other expense, net		(796	)		1,060
Income before provision for income taxes		10,497			19,197
Provision for income taxes		2,472			4,991
Net income	$	8,025		$	14,206
Basic net income per share	$	0.10		$	0.16
Diluted net income per share	$	0.10		$	0.16
Weighted average shares outstanding for basic net income per share		83,625			88,526
Weighted average shares outstanding for diluted net income per share		84,250			90,247

POLYCOM, INC.

GAAP to Non-GAAP Reconciliation

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended
	March 31, 2009
	GAAP			Excluded			Non-GAAP
Revenues:
Product revenues	$	183,294		$	—		$	183,294
Service revenues		42,116			—			42,116
Total revenues		225,410			—			225,410
Cost of revenues:
Cost of product revenues		78,007			5,036	(a)		72,971
Cost of service revenues		20,469			753	(b)		19,716
Total cost of revenues		98,476			5,789			92,687
Gross profit		126,934			(5,789	)		132,723
Operating expenses:
Sales and marketing		66,233			1,900	(b)		64,333
Research and development		28,453			1,873	(b)		26,580
General and administrative		13,589			1,875	(b)		11,714
Amortization of purchased intangibles		1,464			1,464			—
Restructuring costs		6,417			6,417			—
Litigation reserves and payments		—			—			—
Total operating expenses		116,156			13,529			102,627
Operating income		10,778			(19,318	)		30,096
Interest income, net		515			—			515
Other expense, net		(796	)		—			(796	)
Income before provision for income taxes		10,497			(19,318	)		29,815
Provision for income taxes		2,472			(4,833	)		7,305
Net income	$	8,025		$	(14,485	)	$	22,510
Basic net income per share	$	0.10		$	(0.17	)	$	0.27
Diluted net income per share	$	0.10		$	(0.17	)	$	0.27
Weighted average shares outstanding for basic net income per share		83,625						83,625
Weighted average shares outstanding for diluted net income per share		84,250						84,250

(a) Excluded amount includes $3,326 related to the amortization of purchased intangibles for core and existing technologies, $1,050 related to past license fee claims, $548 for stock-based compensation expense recorded in accordance with SFAS 123R, “Share-Based Payment,” during the period and $112 related to the effect of stock-based compensation on warranty expense rates.

(b) 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, 2008
	GAAP		Excluded			Non-GAAP
Revenues:
Product revenues	$	222,451	$	—		$	222,451
Service revenues		36,469		—			36,469
Total revenues		258,920		—			258,920
Cost of revenues:
Cost of product revenues		90,187		4,494	(a)		85,693
Cost of service revenues		18,254		1,070	(b)		17,184
Total cost of revenues		108,441		5,564			102,877
Gross profit		150,479		(5,564	)		156,043
Operating expenses:
Sales and marketing		73,861		3,170	(b)		70,691
Research and development		34,934		2,914	(b)		32,020
General and administrative		14,894		2,168	(b)		12,726
Acquisition-related costs		159		159			—
Purchased in-process research and development		—		—			—
Amortization of purchased intangibles		1,827		1,827			—
Restructuring costs		3,615		3,615			—
Litigation reserves and payments		6,238		6,238			—
Total operating expenses		135,528		20,091			115,437
Operating income		14,951		(25,655	)-		40,606
Interest income, net		3,186		—			3,186
Other expense, net		1,060		—			1,060
Income before provision for income taxes		19,197		(25,655	)		44,852
Provision for income taxes		4,991		(7,119	)		12,110
Net income	$	14,206	$	(18,536	)	$	32,742
Basic net income per share	$	0.16	$	(0.21	)	$	0.37
Diluted net income per share	$	0.16	$	(0.20	)	$	0.36
Weighted average shares outstanding for basic net income per share		88,526					88,526
Weighted average shares outstanding for diluted net income per share		90,247					90,247

(a) Excluded amount includes $3,493 related to the amortization of purchased intangibles for core and existing technologies, $806 for stock-based compensation expense recorded in accordance with SFAS 123R, “Share-Based Payment,” during the period and $195 related to the effect of stock-based compensation on warranty expense rates.

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

POLYCOM, INC.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

	March 31, 2009		December 31, 2008
ASSETS
Current assets
Cash and cash equivalents	$	155,085	$	165,669
Short-term investments		178,502		152,407
Trade receivables, net		113,161		126,497
Inventories		87,117		89,730
Deferred taxes		29,134		29,295
Prepaid expenses and other current assets		32,065		34,207
Total current assets		595,064		597,805
Property and equipment, net		78,323		77,294
Long-term investments		5,140		6,420
Goodwill		492,777		495,083
Purchased intangibles, net		60,026		65,369
Deferred taxes		19,289		19,415
Other assets		14,333		16,298
Total assets	$	1,264,952	$	1,277,684
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	52,294	$	57,731
Accrued payroll and related liabilities		21,041		28,711
Taxes payable		1,093		—
Deferred revenue		72,800		69,238
Other accrued liabilities		51,768		58,402
Total current liabilities		198,996		214,082
Non-current liabilities
Long-term deferred revenue		42,427		43,285
Taxes payable		35,214		35,878
Deferred taxes		2,500		2,638
Other long-term liabilities		11,587		13,459
Total liabilities		290,724		309,342
Stockholders’ equity		974,228		968,342
Total liabilities and stockholders’ equity	$	1,264,952	$	1,277,684

POLYCOM, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Three Months Ended
	March 31, 2009			March 31, 2008
Cash flows from operating activities:
Net income	$	8,025		$	14,206
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		7,863			6,475
Amortization of purchased intangibles		4,797			5,308
Provision for doubtful accounts		247			245
Provision for excess and obsolete inventories		1,517			159
Non-cash stock based compensation		6,949			10,128
Excess tax benefits from stock-based compensation		—			(422	)
Loss on disposals of property and equipment		10			7
Changes in assets and liabilities, net of the effect of acquisitions:
Trade receivables		13,089			(2,597	)
Inventories		1,096			(25,825	)
Deferred taxes		1,175			819
Prepaid expenses and other assets		1,778			(10,157	)
Accounts payable		(5,437	)		15,831
Taxes payable		(737	)		(2,720	)
Other accrued liabilities		(13,539	)		24,795
Net cash provided by operating activities		26,833			36,252
Cash flows from investing activities:
Purchases of property and equipment		(8,548	)		(9,246	)
Purchases of investments		(158,045	)		(90,889	)
Proceeds from sale and maturity of investments		130,600			98,669
Net cash used in investing activities		(35,993	)		(1,466	)
Cash flows from financing activities:
Proceeds from issuance of common stock under employee option and stock purchase plans		6,404			12,725
Repurchase of common stock		(7,828	)		(62,243	)
Excess tax benefits from stock-based compensation		—			422
Net cash used in financing activities		(1,424	)		(49,096	)
Net decrease in cash and cash equivalents		(10,584	)		(14,310	)
Cash and cash equivalents, beginning of period		165,669			279,560
Cash and cash equivalents, end of period	$	155,085		$	265,250