The idea here is that this sort of technology is not necessarily about a demonstrable return on investment and cost cutting but more about expansionary investment spending. In this view the slowdown is merely a function of constrained expansionary IT capital expenditures, which will inevitably come back when the economy recovers.
Of course this is a tempting argument because it implies some pent up demand for these technologies. Now throw in the lowly evaluation of Polycom, and the stock starts to look attractive. Indeed, it has been investing in upgrading its solutions to try to pull ahead of Cisco Systems, Inc. (NASDAQ:CSCO) and anticipate rising demand in the future.
The Bottom Line
My view is that it is a combination of these issues in the near term, but the longer term structural concerns are significant. Over the last year the trends in IT spending have been towards mobile solutions, cloud based computing and solutions that encourage flexibility and cross platform usage. The idea of spending on expensive hardware in order to have service and upgrade a tied solution within a fixed location is simply not where IT is trending.
The article Is This Technology Facing Structural Decline? originally appeared on Fool.com and is written by Lee Samaha.
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