Plantronics Toothy Grin

Declan is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Motorola (NYSE: MSI), or at least Motorola Mobility, may be stealing the headlines as 4,000 unfortunates lose their jobs at the hands of Google (NASDAQ: GOOG).  But another player in the telecommunications sector, Plantronics (NYSE: PLT),  has enjoyed a positive bump of late.

The maker of headsets had  its own trouble in May when, despite a doubling of its dividend, it wasn't able to gloss over some disappointing earnings.  This on the back of a company which has traditionally come in ahead of analyst estimates.  But even in May, the company had managed to reverse a worrying drop in market share, moving  up to 35% from sub-30% earlier in the year.  The company's work on its Unified Communications was a significant contributor to its revenue despite single-digit adoption levels, offering plenty of scope for improvement.  However, the CEO cautioned Enterprise adoption of its Unified Communications (UC) is unlikely to pick up until after 2015. Consider Plantronics a slow burner despite some favorable price action and the cheering from its fans.

Even so, the slow burner didn't have to wait long to get a boost.  On the next earnings the stock gained sharply on strong volume, reclaiming most of the losses generated by May's earnings.  The driver was not so much the earnings beat - which it tends to do anyway, but on the announced share-repurchase plan.  There was little in the earnings call to offer a surprise; weak growth in Europe and Africa was offset against strong growth in the Asia-Pacific region and the Americas.  A new CFO was also unveiled. There was some voiced disappointment on the UC data, but from the May call it was clear this wasn't a segment to see big returns in the short term.

Going forward, the outlook for earnings beats remains good with respect to its Accounts Receivable and Days Sales Outstanding.  

Google's plans for Motorola Mobility to focus on high-end smartphones may help Plantronics.  Motorola Mobility do make bluetooth headsets which compete with Plantronics products, but it remains to be seen if Google is going to retain a sector of the business which isn't 'their game'.  This year also saw the end of its NFL deal, so no more coaches prowling the sidelines with Motorola cans on their head, probably one of their most prominent - if expensive - active promotions. 

Of course, what's good for Plantronics is also good for other competitors; players to benefit include Samsung and LG, including a number of smaller private headset makers in the market.  It will be a number of months before the future of Motorola Mobility is mapped out by Google, but certainly there is reason for optimism for those willing to take a long term view on Plantronics.

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