Investor Elliott Urges Polycom, Mitel Merger
Regarding Polycom and Mitel, Elliott officials said they and other UCC vendors are in a "very difficult market" that has caused "Polycom's stock to meaningfully underperform all relevant metrics over all relevant timeframes. … Maintaining the status quo strategy will perpetuate Polycom's track record of underperformance and risk further shareholder value erosion." They noted that in the last two years, Polycom has made such moves as cutting expenses, buying back stock and changing management, but said those steps haven't returned value to shareholders. They urged Polycom to undergo an immediate comprehensive review of its options. The options include merging with Mitel. Mitel CEO Richard McBee, since taking over in 2011, has been aggressively moving the company toward cloud and mobile solutions, and has used acquisitions of companies like Aastra Technologies and Mavenir Systems to help with that effort. Last year, Mitel made a $574 million bid for rival ShoreTel, though ShoreTel board members never pursued the offer and it was withdrawn. McBee has said many times that the UCC industry is set up for consolidation, and that his intent is to have Mitel be a buyer."There's not enough revenue for all companies to win," Kerravala said. "Vendors must be willing to put both feet into the new [cloud] world and embrace it, and not sacrifice the future for their legacy businesses." Elliott officials in their letter echoed that sentiment, saying that "we believe the space is ripe for consolidation—small competitors with low valuations and duplicative cost structures create the opportunity."
Zeus Kerravala, principal analyst with ZK Research, told eWEEK last month that the unified communications (UC) field consists of Cisco and Microsoft at the top, with a range of other vendors—such as Mitel, ShoreTel, Avaya, Unify and Nokia Networks (which is buying Alcatel-Lucent)—in the next tier. Cisco also is a player in video conferencing, where other competitors include Logitech's Lifesize Communications business, Vidyo and Blue Jeans Network.