Tekelec Announces 3Q 2006 Results, Switching Business Restructure Plans

By Mae Kowalke

TMCnet Associate Editor

 

As part of its third quarter, 2006 earnings report Wednesday, network applications company Tekelec (News - Alert) revealed some of its upcoming plans to restructure its Switching Solutions Business Unit (SSG).

 

The company said that, “as part of its ongoing efforts to align the cost structure with SSG’s current business opportunities,” it has reduced the size of its Plano, Texas operations by cutting 104 employees and 25 contractors. Additionally, the company will not be replacing 22 employees who left during the third quarter of 2006.

 

A Light Reading report said Tekelec plans to sell its switching business to Ericsson (News - Alert) AB.

 

Reuters reported that Tekelec said it “it expects to take charges of about $4 million to $5 million in the fourth quarter related to severance and other costs associated with the job cuts.”

 

Financial advisor J.P. Morgan Securities has been retained by Tekelec “to advise on strategic alternatives to leverage its switching technology portfolio,” Reuters said.

Tekelec’s revenues from third quarter, 2006 operations were $155.2 million, up 43 percent from the third quarter of 2005, the company said.

 

Losses for the period (for continuing operations) were $87.5 million--$1.30 loss per diluted share. That compares to continuing operations losses of $7.6 million ($0.11 per diluted share) for the third quarter of 2005.

 

Tekelec sold its IEX Contact Center business to NICE Systems (News - Alert), Inc. in July, and as a result income from that business was included in Tekelec’s discontinued operations report.

 

The company reported $176.8 million in net of taxes income from discontinued operations during the third quarter of 2006—compared to $3.5 million during the same period in 2005.

 

As of 4:00 p.m. EST, Tekelec shares were listed at $14.51, down $0.24 (-1.63 percent) from previous close of $14.75.