UPDATE 2-Polycom 1st-qtr hurt by lower govt spending, sees weak 2nd qtr

Wed Apr 18, 2012 6:44pm EDT

* Sees Q2 rev $367 mln to $377 mln vs est $387.3 mln

* Sees Q2 adj EPS $0.20 to $0.22 vs est $0.25

* Q1 rev up 7 pct to $367 mln vs est $371.7 mln

* Shares down 6 pct in aftermarket trade

April 18 (Reuters) - Videoconferencing company Polycom Inc's forecast second quarter below expectations, and said first quarter was hurt by lower government spending.

The company forecast second-quarter earnings of 20 cents to 22 cents per share and revenue of $367 million to $377 million.

Analysts, on average, were expecting earnings of 25 cents per share, on revenue of $387.3 million, according to Thomson Reuters I/B/E/S.

During the first quarter, revenue growth in North America fell short of expectations, while emerging markets were hurt by lower government spending, the company said on a conference call with analysts.

"We did see a slowdown in the government spending, which we didn't see in the rearview mirror, but clearly there was overzealousness," chief executive Andy Miller said.

The company, which recently hired Electronic Arts Inc's Eric Brown in place of long-time CFO Michael Kourey, said it is working to reduce operating costs in the second quarter.

Polycom, which benefited last year as Cisco Systems struggled with a big and unwieldy business, is now feeling the heat as the world's biggest network equipment maker is back on track with a focus on its video business.

The company posted a first-quarter net income of $15 million or 8 cents per share, compared with $34 million, or 19 cents per share, last year.

The company earned 38 cents per share in the year-ago first quarter before it announced a 2-for-1 stock split in July 2011.

Excluding items, the company which competes with Cisco Systems, Logitech International SA and Huawei Technologies Co Ltd, earned 22 cents a share.

Polycom, which counts HTC Corp Heineken NV and Nike Inc among others as customers, posted a 7 percent increase in revenue to $367 million.

Earlier this month, the company slashed its first-quarter revenue forecast, citing slower business in North America and Asia Pacific.

Analysts had expected adjusted earnings of 22 cents a share on revenue of $371.7 million.

Polycom shares fell as much as 6 percent in aftermarket trade. They closed at $13.30 on Wednesday on the Nasdaq. They have fallen 23 percent since the company cut its revenue outlook on April 5 to hit a year low of $13.46 on April 11.

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