Takeover Rumors Bump Polycom Shares

Will anyone who’s not interested in acquiring Polycom (PLCM) please raise your hand?

The videoconferencing and desk phone provider has been rumored as a takeover target since Cisco (CSCO) said it would acquire Polycom rival Tandberg last week, and the list of potential buyers is long: Among the companies that have been rumored to be interested are Hewlett-Packard (HPQ), Alcatel-Lucent (ALU), Avaya, Sony Corp. (SNE), Panasonic, Microsoft (MSFT), and IBM (IBM). Heck, why not Walt Disney Co. (DIS)?

Polycom is seen to be on the block because its main rival just became part of the world’s largest vendor of networking gear. Between them the Oslo, Norway-based Tandberg and Calif.-based Polycom control about 70 percent of the market for videoconferencing, which most analysts see growing by billions of dollars over the next several years. With Tandberg joining forces with Cisco, which has its own formidable line of high-end TelePresence systems for life-sized, high-definition conferencing, Polycom’s ability to compete as a standalone company could be limited.

On the other hand, in the short term, Polycom stands to pick up new business from customers unwilling to go with Cisco and from channel partners who, in other markets, sell products that compete with Cisco lines.

One of the most intriguing possible suitors is Silicon Valley private-equity firm Silver Lake Partners, which has shown an appetite for enterprise communications providers. Major recent investments by Silver Lake include Avaya and Skype.

Polycom’s share price, which has increased by 70 percent in the last six months, was up nearly 3 percent in midday trading on the takeover rumors, at around $27.50. Piper Jaffray analyst Troy Jensen told Reuters that Polycom could be worth $35 to $38 per share in an acquisition deal.

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