Polycom (PLCM) 8-K Polycom Reports Third Quarter 2011 Earnings

Exhibit 99.1

Investor Contact:	Laura Graves
	Polycom, Inc.
	925.924.5630
	laura.graves@polycom.com
Press Contact:	Shawn Dainas
	Polycom, Inc.
	925.924.5676
	shawn.dainas@polycom.com

Polycom Reports Third Quarter 2011 Earnings

Q3 Revenue Growth of 23 Percent Year-over-Year to a Record $379 Million

PLEASANTON, Calif. – Oct. 19, 2011 – Polycom, Inc. (Nasdaq: PLCM), the global leader in standards-based unified communications (UC), today reported its earnings for the third quarter ended September 30, 2011.

Third quarter 2011 consolidated net revenues were a record $379 million, compared to $308 million for the third quarter of 2010. GAAP net income for the third quarter of 2011 was $24 million, or 13 cents per diluted share, compared to $17 million, or 10 cents per diluted share, for the same period last year. Non-GAAP net income for the third quarter of 2011 was $48 million, or 26 cents per diluted share, compared to non-GAAP net income of $34 million, or 19 cents per diluted share, for the third quarter of 2010. Note that the share and per share data for all periods presented in this release have been adjusted to reflect the two-for-one stock split that was effective July 1, 2011.

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

On a geographic basis, consolidated net revenues for the third quarter of 2011 were comprised of:

• 52 percent Americas, or $197 million, an increase of 16 percent year-over-year;

• 24 percent Europe, Middle East, and Africa, or $92 million, an increase of 23 percent year-over-year; and

• 24 percent Asia Pacific, or $90 million, an increase of 41 percent year-over-year.

“Polycom has clearly emerged as the premier UC provider that delivers customers a seamless and secure video collaboration solution from immersive telepresence to the desktop to the world’s leading mobile devices,” said Andrew Miller, Polycom president and CEO. “Leveraging the Polycom RealPresence™ Platform, we believe that we are best positioned to capture the network effect of video communications being driven by the demand for real-time collaboration in the workplace and social networks. Our powerful software-based cloud and mobility strategy is beginning to take shape as evidenced by our recent partnership and acquisition announcements.”

“Polycom generated significant Q3 revenue growth in the emerging geographies and the US Federal market,” said Michael Kourey, Polycom’s executive vice president, finance and administration, and CFO. “In addition, our acquisition of HP’s visual collaboration solution is already performing well, securing new, large customers in Q3 for Polycom’s leading full UC portfolio. Although partially offset by lower year-over-year revenue growth in the enterprise customer segment, Polycom generated solid operating results, including a 37% increase in net income year-over-year. Net of the strategic acquisitions and stock repurchases in the period, Polycom exited Q3 with $540 million in cash and investments and no debt.”

Q3 2011 Business Highlights

• Strong revenue growth in emerging geographies—up over 50 percent year-over-year

• Key certifications and momentum with US Federal sector, growing bookings nearly 40 percent year-over-year

• Polycom Open Collaboration Network™ partners generated approximately 26 percent of revenues

• Completed HP Visual Collaboration acquisition with excellent initial results

• Unveiled cloud-based software strategy, bringing secure HD video collaboration to the broadest range of business, video, mobile, and social networking applications

• Announced partnership with Jive Software to integrate Polycom HD video into Jive’s social business platform

Earnings Call Details

Polycom will hold a conference call today, Oct. 19, 2011, at 5 p.m. EDT/2 p.m. PDT to discuss its third quarter earnings. You may participate by viewing the webcast atwww.polycom.com/investors or, for callers in the US and Canada, by calling 800.897.4662; and for callers outside of the US and Canada, by calling 212.231.2915. The pass code for the call is “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 21540950. A replay of the call will be available onwww.polycom.com for approximately 12 months.

Forward Looking Statements

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 Polycom as being best positioned to capture the network effect of video communications and the drivers for such demand. 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; the impact of increased competition due to consolidation in our industry or competition from companies that are larger or that have greater resources than we do; potential fluctuations in results and future growth rates; risks associated with general economic conditions and external market factors; the market acceptance of Polycom’s products and changing market demands, including demands for differing technologies or product and services offerings; our ability to successfully integrate our acquisitions into our business; possible delays in the development, availability and shipment of new products; increasing costs and differing uses of capital; changes in key personnel that may cause disruption to the business; any disruptive impact to the Company that may result from new executive hires; the impact of restructuring actions; and the impact of global conflicts that may adversely impact our business. Many of these risks and uncertainties are discussed in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, and in other reports filed by Polycom with the SEC. Polycom disclaims any intent or obligations to update these forward-looking statements.

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.

GAAP to non-GAAP Reconciliation

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.

About Polycom

Polycom is the global leader in standards-based unified communications (UC) solutions fortelepresence,video, andvoice, powered by the Polycom RealPresence platform. The RealPresence platform interoperates with the broadest range of business, mobile and social applications and devices. More than 400,000 organizations trust Polycom solutions to collaborate and meet face to face from any location for more productive and effective engagement with colleagues, partners, customers and prospects. Polycom, together with its broad partner ecosystem, provides customers with the best TCO, scalability, and security – on-premises, hosted or cloud delivered. Visitwww.polycom.com or connect with Polycom onTwitter,Facebook, andLinkedIn.

^© 2011 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.

GAAP to Non-GAAP Reconciliation

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended									Nine Months Ended
	September 30, 2011									September 30, 2011
	GAAP			Excluded			Non-GAAP			GAAP			Excluded			Non-GAAP
Revenues:
Product revenues	$	302,435		$	—		$	302,435		$	889,362		$	—		$	889,362
Service revenues		76,582			—			76,582			199,429			—			199,429
Total revenues		379,017			—			379,017			1,088,791			—			1,088,791
Cost of revenues:
Cost of product revenues		121,271			3,657	(a)		117,614			352,922			11,211	(a)		341,711
Cost of service revenues		31,164			1,349	(b)		29,815			82,540			2,975	(b)		79,565
Total cost of revenues		152,435			5,006			147,429			435,462			14,186			421,276
Gross profit		226,582			(5,006	)		231,588			653,329			(14,186	)		667,515
Operating expenses:
Sales and marketing		113,108			7,966	(b)		105,142			320,717			19,191	(b)		301,526
Research and development		53,589			4,876	(b)		48,713			147,116			10,991	(b)		136,125
General and administrative		22,347			5,833	(c)		16,514			61,993			13,048	(c)		48,945
Amortization of purchased intangibles		3,009			3,009			—			6,093			6,093			—
Restructuring costs		1,264			1,264			—			4,739			4,739			—
Acquisition-related costs		3,578			3,578			—			7,924			7,924			—
Total operating expenses		196,895			26,526			170,369			548,582			61,986			486,596
Operating income		29,687			(31,532	)		61,219			104,747			(76,172	)		180,919
Other income (expense), net		(1,298	)		—			(1,298	)		(3,305	)		(500	)(d)		(2,805	)
Income before provision for income taxes		28,389			(31,532	)		59,921			101,442			(76,672	)		178,114
Provision for income taxes		4,669			(6,918	)(e)		11,587			15,201			(23,694	)(e)		38,895
Net income	$	23,720		$	(24,614	)	$	48,334		$	86,241		$	(52,978	)	$	139,219
Basic net income per share	$	0.13		$	(0.14	)	$	0.27		$	0.49		$	(0.30	)	$	0.79
Diluted net income per share	$	0.13		$	(0.13	)	$	0.26		$	0.47		$	(0.30	)	$	0.77
Weighted average shares outstanding for basic net income per share		177,249						177,249			176,325						176,325
Weighted average shares outstanding for diluted net income per share		182,519						182,519			181,816						181,816

(a) For the three months ended September 30, 2011, the excluded amount includes $2,753 related to the amortization of purchased intangibles for core and existing technologies, $767 for stock-based compensation expense recorded during the period and $137 related to the effect of stock-based compensation on warranty expense rates. For the nine months ended September 30, 2011, the excluded amount includes $8,829 related to the amortization of purchased intangibles for core and existing technologies, $2,017 for stock-based compensation expense recorded during the period and $365 related to the effect of stock-based compensation on warranty expense rates.

(b) Excluded amount represents stock-based compensation expense recorded during the period.

(c) For the three months ended September 30, 2011, the excluded amount includes $5,486 for stock-based compensation expense recorded during the period and $347 for the legal costs related to the indemnification of a former officer of the Company. For the nine months ended September 30, 2011, the excluded amount includes $11,409 for stock-based compensation expense recorded during the period and $1,639 for the legal costs related to the indemnification of a former officer of the Company.

(d) Excluded amount represents the impairment of an investment in a private company.

(e) For the three months ended September 30, 2011 the excluded amount represents the tax impact on expenses which are excluded in items (a)-(c) above. For the nine months ended September 30, 2011, the excluded amount represents the tax impact on expenses which are excluded in items (a)-(d) above, as well as a $7,487 benefit related to the resolution of a multi-year tax audit.

POLYCOM, INC.

GAAP to Non-GAAP Reconciliation

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended							Nine Months Ended
	September 30, 2010							September 30, 2010
	GAAP		Excluded			Non-GAAP		GAAP			Excluded			Non-GAAP
Revenues:
Product revenues	$	255,496	$	—		$	255,496	$	728,348		$	—		$	728,348
Service revenues		52,573		—			52,573		150,510			—			150,510
Total revenues		308,069		—			308,069		878,858			—			878,858
Cost of revenues:
Cost of product revenues		99,913		4,044	(a)		95,869		291,463			12,310	(a)		279,153
Cost of service revenues		25,371		849	(b)		24,522		74,390			2,988	(b)		71,402
Total cost of revenues		125,284		4,893			120,391		365,853			15,298			350,555
Gross profit		182,785		(4,893	)		187,678		513,005			(15,298	)		528,303
Operating expenses:
Sales and marketing		97,214		7,095	(b)		90,119		282,491			20,658	(b)		261,833
Research and development		38,278		2,339	(b)		35,939		108,423			7,788	(b)		100,635
General and administrative		19,440		4,322	(c)		15,118		55,627			13,013	(c)		42,614
Amortization of purchased intangibles		1,406		1,406			—		4,267			4,267			—
Restructuring costs		3,301		3,301			—		6,574			6,574			—
Litigation reserves and payments		—		—			—		1,235			1,235			—
Total operating expenses		159,639		18,463			141,176		458,617			53,535			405,082
Operating income		23,146		(23,356	)		46,502		54,388			(68,833	)		123,221
Other income (expense), net		293		249	(d)		44		(7,931	)		(5,324	)(d)		(2,607	)
Income before provision for income taxes		23,439		(23,107	)		46,546		46,457			(74,157	)		120,614
Provision for income taxes		6,171		(6,512	)		12,683		11,174			(20,111	)		31,285
Net income	$	17,268	$	(16,595	)	$	33,863	$	35,283		$	(54,046	)	$	89,329
Basic net income per share	$	0.10	$	(0.10	)	$	0.20	$	0.21		$	(0.32	)	$	0.53
Diluted net income per share	$	0.10	$	(0.09	)	$	0.19	$	0.20		$	(0.31	)	$	0.51
Weighted average shares outstanding for basic net income per share		170,626					170,626		170,090						170,090
Weighted average shares outstanding for diluted net income per share		175,968					175,968		175,728						175,728

(a) For the three months ended September 30, 2010, the excluded amount includes $3,321 related to the amortization of purchased intangibles for core and existing technologies, $610 for stock-based compensation expense recorded during the period and $113 related to the effect of stock-based compensation on warranty expense rates. For the nine months ended September 30, 2010, the excluded amount includes $9,996 related to the amortization of purchased intangibles for core and existing technologies, $1,968 for stock-based compensation expense recorded during the period and $346 related to the effect of stock-based compensation on warranty expense rates.

(b) Excluded amount represents stock-based compensation expense recorded during the period.

(c) For the three months ended September 30, 2010, the excluded amount includes $3,904 for stock-based compensation expense recorded during the period and $418 for severance. legal and other costs associated with the CEO transition in May 2010. For the nine months ended September 30, 2010, the excluded amount includes $9,008 for stock-based compensation expense recorded during the period and $4,005 for severance, legal and other costs associated with the CEO transition in May 2010.

(d) For the three months ended September 30, 2010, the excluded amount represents the net gain realized during the period on preferred equity securities for which we previously recognized a loss as the securities were deemed to be other than temporarily impaired. For the nine months ended September 30, 2010, the excluded amount represents the loss recognized during the period on preferred securities considered to be other than temporarily impaired, net of any subsequent realized gains.

POLYCOM, INC.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

	September 30, 2011		December 31, 2010
ASSETS
Current assets
Cash and cash equivalents	$	289,016	$	324,188
Short-term investments		202,181		170,154
Trade receivables, net		205,968		154,507
Inventories		110,829		113,994
Deferred taxes		33,939		32,357
Prepaid expenses and other current assets		50,292		41,884
Total current assets		892,225		837,084
Property and equipment, net		120,532		110,321
Long-term investments		48,345		41,316
Goodwill and purchased intangibles		645,793		519,685
Deferred taxes		16,568		18,388
Other assets		20,884		20,611
Total assets	$	1,744,347	$	1,547,405
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	100,563	$	90,890
Accrued payroll and related liabilities		35,147		35,222
Deferred revenue		132,071		104,919
Other accrued liabilities		53,013		54,651
Total current liabilities		320,794		285,682
Non-current liabilities
Deferred revenue		72,600		55,292
Taxes payable		15,285		16,690
Deferred taxes		802		2,057
Other non-current liabilities		12,986		12,714
Total liabilities		422,467		372,435
Stockholders’ equity		1,321,880		1,174,970
Total liabilities and stockholders’ equity	$	1,744,347	$	1,547,405

POLYCOM, INC.

Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended					Nine Months Ended
	September 30, 2011			September 30, 2010		September 30, 2011			September 30, 2010
Revenues:
Product revenues	$	302,435		$	255,496	$	889,362		$	728,348
Service revenues		76,582			52,573		199,429			150,510
Total revenues		379,017			308,069		1,088,791			878,858
Cost of revenues:
Cost of product revenues		121,271			99,913		352,922			291,463
Cost of service revenues		31,164			25,371		82,540			74,390
Total cost of revenues		152,435			125,284		435,462			365,853
Gross profit		226,582			182,785		653,329			513,005
Operating expenses:
Sales and marketing		113,108			97,214		320,717			282,491
Research and development		53,589			38,278		147,116			108,423
General and administrative		22,347			19,440		61,993			55,627
Amortization of purchased intangibles		3,009			1,406		6,093			4,267
Restructuring costs		1,264			3,301		4,739			6,574
Acquisition-related expenses		3,578			—		7,924			—
Litigation reserves and payments		—			—		—			1,235
Total operating expenses		196,895			159,639		548,582			458,617
Operating income		29,687			23,146		104,747			54,388
Other income (expense), net		(1,298	)		293		(3,305	)		(7,931	)
Income before provision for income taxes		28,389			23,439		101,442			46,457
Provision for income taxes		4,669			6,171		15,201			11,174
Net income	$	23,720		$	17,268	$	86,241		$	35,283
Basic net income per share	$	0.13		$	0.10	$	0.49		$	0.21
Diluted net income per share	$	0.13		$	0.10	$	0.47		$	0.20
Weighted average shares outstanding for basic net income per share		177,249			170,626		176,325			170,090
Weighted average shares outstanding for diluted net income per share		182,519			175,968		181,816			175,728

POLYCOM, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Nine Months Ended
	September 30, 2011			September 30, 2010
Cash flows from operating activities:
Net income	$	86,241		$	35,283
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		38,732			29,728
Amortization of purchased intangibles		14,943			14,263
Provision for excess and obsolete inventories		6,189			3,337
Non-cash stock based compensation		46,583			42,410
Impairment of private company investments		500			—
Excess tax benefits from stock-based compensation		(13,330	)		(6,649	)
Write down of investments other than temporarily impaired		—			6,530
Loss on disposals of property and equipment		738			215
Changes in assets and liabilities, net of the effect of acquisitions:
Trade receivables		(49,553	)		(14,621	)
Inventories		1,261			(34,217	)
Deferred taxes		(1,383	)		(5,068	)
Prepaid expenses and other assets		(4,705	)		(24,353	)
Accounts payable		9,466			19,323
Taxes payable		11,553			3,571
Other accrued liabilities		30,395			31,913
Net cash provided by operating activities		177,630			101,665
Cash flows from investing activities:
Purchases of property and equipment		(45,404	)		(51,816	)
Purchases of investments		(306,199	)		(291,613	)
Proceeds from sale of investments		31,687			98,311
Proceeds from maturities of investments		235,412			138,894
Net cash paid in purchase acquisitions		(139,041	)		—
Net cash used in investing activities		(223,545	)		(106,224	)
Cash flows from financing activities:
Proceeds from issuance of common stock under employee option and stock purchase plans		40,495			43,796
Repurchase of common stock		(43,082	)		(69,264	)
Excess tax benefits from stock-based compensation		13,330			6,649
Net cash provided by (used in) financing activities		10,743			(18,819	)
Net decrease in cash and cash equivalents		(35,172	)		(23,378	)
Cash and cash equivalents, beginning of period		324,188			331,098
Cash and cash equivalents, end of period	$	289,016		$	307,720