Plantronics: Consumer Looking More and More Like a Quagmire

Plantronics (PLT) reported earnings:

Plantronics, Inc., today announced fourth quarter net revenues of $194.7 million compared with $206.7 million in the fourth quarter of fiscal 2006. Revenues were at the midpoint of previously provided guidance of $190 to $200 million. Plantronics’ GAAP diluted earnings per share were $0.21 for the fourth quarter compared with $0.43 in the fourth quarter of fiscal 2006. Non-GAAP diluted earnings per share were $0.28 and exceeded the range of guidance the Company provided on January 22, 2007 which was $0.22 to $0.27. The difference between GAAP and non-GAAP earnings per share is primarily the cost of equity-based compensation.

Analysts were targeting $0.25 on $196 million in sales. The company also guided for sales of $205-$210 million and GAAP EPS (c’mon Plantronics - enough with the non-GAAP now that options have been expensed for a full year) of $0.20-$0.23. The consensus was for $0.28 on $199 million, indicating that margins are now expected to be worse.

The company blames the shortfall on the former Altec Lansing subsidiary, which we have complained about repeatedly. In fact, the core headset business is improving dramatically.

Office wireless products were up 28% compared to the fourth quarter a year ago and 16% sequentially. After several quarters of relatively flat sequential results, growth resumed in Q3 and continued in Q4, bringing the fiscal year growth in this important category to 36% compared to fiscal 2006.

Gross margin in Q4 FY07 was 45.1% compared with 43.1% in the year ago quarter. Among the factors driving gross margin higher from Q4 FY06 were the positive impact of cost reduction on our Bluetooth mobile and office wireless products, and our improved product portfolio in Bluetooth mobile.

Apart from the problems in the consumer line, we actually liked the report. However, the consumer is looking more and more like a quagmire, and we’re not sure how they are going to extricate themselves.

Disclosure: author is long Plantronics at the time of publication.

PLT 1-yr chart: