Tekelec Q3 earnings jump 42 percent :: Editor’s Blog at Local Tech Wire

Updated Nov. 4, 2009 at 8:56 a.m.

Tekelec Q3 earnings jump 42 percent

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MORRISVILLE, N.C. — Telecommunications gear and software firm Tekelec (Nasdaq: TKLC) posted third-quarter earnings of 27 cents per share Wednesday, topping analysts' estimates of 21 cents and climbing 42 percent from the same quarter in 2008.

The company also raised its guidance for the full year, predicting earnings per share of 95 cents to $1. Analysts had been saying they expected an average of 94 cents.

The figures are based on net income of $18.2 million for the quarter that ended Sept. 30, the company said in an announcement issued before markets opened. The 2008 comparable figure was $12.5 million.

Revenue for the third quarter of 2009 was $114.9 million, up 8 percent from $106 million a year ago and ahead of analysts' predictions of $108.1 million for this year.

Order backlogs continued to drop, however. The company said it was sitting on orders for $336.7 million at the end of September, compared with $353.3 million three months earlier and as of June 30, 2009 and $369 million a year ago.

Tekelec shares closed at $15.25 on Tuesday.

The company said it improved its operating margin in the quarter to 23 percent from 18 percent a year ago.

"Tekelec continues to focus on business fundamentals and strong execution," Frank Plastina, Tekelec’s president and CEO, said. "Also, our next generation products continue to gain traction and we now have a total of eight Tier-1 customers who have purchased our Eagle XG platform."

For the first nine months of this year, revenue was up slightly but the value of orders was down, Tekelec reported.

"Revenue from continuing operations was $345.8 million, up 1 percent compared to $340.7 million for the first nine months of 2008," the company said. "For the first nine months of 2009, the company had orders of $267.4 million, down 9 percent compared with $292.7 million for the first nine months of 2008."

"We do not believe any other player in the industry is investing as much as we are," Plastina said during a conference call with analysts and others. That, he said, should position Tekelec to help providers manage mushrooming voice and data demand on their networks.

Plastina said mobile service providers will likely see a 68 percent increase in traffic over the next few years while getting only a 12 percent revenue increase, and a push for efficiency will favor Tekelec products.

Plastina also said that while some providers have held down capital expenditures during the recession, they still will need to invest in technology. The company will not see as much demand in the fourth quarter as it had hoped, he said, but 2010 and beyond should see providers making purchases they put off from this year.

Officials also called new rules about revenue recognition a "wild card" for future numbers. Letting companies book revenue for parts of a sale instead of waiting for a whole sale to be completed "will make us less of a backlog-driven company," Plastina told analysts.

Tags: Tekelec, Hot Off the Wire

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