Barron's Jay Palmer makes the case for Plantronics (PLT), forecasting the company will play a major role in the future of office communications.
Many major technology companies are pushing for unified communications, or UC, a new approach to office communications that basically switches everything to the computer. Plantronics should be one of the first beneficiaries of the multimillion dollar market for UC, which should grow rapidly over the next several years as businesses seize the opportunity to boost corporate efficiency. In fact, Forrester Research found that over 80% of Fortune 2000 companies are buying UC systems or considering a purchase, with the market poised to grow at a compound 35% annual rate over the next six years.
Plantronics is already the U.S. market leader in Bluetooth cellular-wireless earpieces, controlling roughly 50% of the market. Sales could climb by over 50% over the next few years. The company could see gains as soon as this year, with its stock possibly rising to around $30 from a recent $20.20.
Plantronics does face one major rival in GN Netcom, a subsidiary of Danish conglomerate GN Store Nord. But Plantronics holds the home-field advantage and is likely to become to be the market leader.
Plantronics' recently released high-end Bluetooth units are selling well, and first quarter earnings were better than expected despite sales that were down 11%. To address last year's problems, Plantronics has initiated layoffs to cut costs, has outsourced some of its production and has closed a manufacturing facility in China.
Reik Read, of Robert W. Baird & Co., forecasts as many as 100M corporate customers for UC over the next five years, and thinks Plantronics will win at least 50% market share. This would bring Plantronics another $5B in revenue between now and 2015, when eve a $2B bump would be a huge win for the company.
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