Despite Strong 3Q Results, Plantronics' 4Q Outlook Sounds Fuzzy

Headset maker Plantronics (PLT) reported revenue for the fiscal third quarter ended December 31 of $215.4 million, above the forecast range of $205 to $215 million, with both GAAP and pro forma profits above the company’s guidance. GAAP EPS came in at 32 cents, and non-GAAP at 38 cents; the company had forecast 19-25 cents on a GAAP basis and 25-30 cents on a pro forma basis.

Sounds good - no pun intended - but there are some catches. For starters, the company noted that the dramatic out performance at the bottom line - a bigger surprise than revenues - reflects a low tax rate from the extension of the R&D tax credit and foreign exchange gains, rather than some magical improvement in operating margins. The company also noted that while its Audio Communications Group topped expectations in the quarter, the Audio Entertainment Group “underperformed.” In fact, the company noted that its entertainment group canceled some orders with suppliers, resulting in some charges to cover material costs that can’t be recovered.

Also, the company says revenue for the fiscal fourth quarter ending in March will be $190 million to $200 million, a bit below the Street consensus of $201.6 million; the company sees GAAP EPS of 16-21 cents a share, and pro forma EPS of 22-27 cents a share, below the Street expectations of 32 cents.

In regular trading yesterday, Plantronics fell 16 cents to $19.97.

PLT 1-yr chart