Taqua FAQua
Q: When was Taqua founded and what does it do?
A: Taqua was founded in March 1998 and, that month, it announced itself to the world as having "a revolutionary new open architecture that will provide the 'missing link' between today's carrier voice and data networks."
The company started as a next-generation Class 5 switch maker and, as it evolved, it added VOIP functionality and data interfaces. Its mandate all along has been to give Tier 2 and Tier 3 carriers a way to replace their legacy voice switches with gear that lets them migrate to data (now VOIP and IMS) networks without giving up completely on their traditional TDM phone businesses. The company's products generally are aimed at replacing central office switches in networks that serve anywhere from 600 to 80,000 subscribers.
Q: Missing link, eh?
A: Yeah. Well, we said the company's switch had evolved.
Q: How did Taqua do as a startup?
A: It survived and kept attracting investors, which says a lot for a company founded in 1998. In February 2004, Tekelec bought Taqua for about $85 million in cash and some other considerations that took the closing purchase price closer to $92 million. That was a few bucks short of the more than $140 million the company had raised in venture capital money during its lifetime.
Q: How did Taqua fare as part of Tekelec's switching business?
A: Not well. Insiders say Tekelec didn't support the product and mismanaged the switching business overall. Sales suffered and competitors like Metaswitch Networks had a field day. In February 2006, Tekelec took a $22.7 million charge against earnings, a good bit of which was related to the write-off of "Taqua purchased technology." The company took another $28.6 million charge related to "the impairment of the goodwill associated with the Taqua reporting unit."
At that point, analysts said the Taqua business had only been generating about $2 million to $3 million in revenues per quarter. Taqua's yearly revenues in 2003 had been as high as $16.3 million, so times were, uh... tough.
Q: What happened then?
A: Things were going so well that, by March 2007, Tekelec sold all of its switching business (which included Taqua) to Genband Inc. Tekelec took a 19.9 percent common equity interest in Genband as part of the transaction. Genband paid $1 million in cash for the whole pile.
Q: So a company that once raised a collective $140 million in venture funding was, as of March 2007, not even able to fetch more than $1 million in cold, hard cash?
A: That's the way it looks on paper.
Q: So how did Taqua fare under Genband?
A: Well, it left. This week, Genband sold Taqua, its maintenance business of some 300 switches, and its product portfolio, for an undisclosed sum to a group of investors led by a Dallas real estate developer, Gerald Harris Stool, pardon the expression. The Taqua board includes Stool; Eric Pratt, who managed the product at Tekelec; and Scott Weidenfeller, former chief marketing officer at Tekelec. Everyone on the board is also an investor in the company.
Q: How big a stake does Genband have in Taqua?
A: Not sure. Maybe none.
Q: Now that Taqua is a standalone company again, who are its competitors?
A: MetaSwitch, Nortel Networks Ltd. , and CopperCom are still slugging it out in the space. Taqua's new brass say the small office switch market for North America will hit about $148 million next year. If it can grab 10 percent of that space, the 40-person firm will be laughing.
Q: What are its chances of succeeding?
A: Well, that depends on what kind of returns its investors want (and how soon they aim to make their money back). A $14.8 million year for Taqua, as projected by its managers, would be its best in years. And, the company will have to hope Nortel doesn't suddenly decide to go nuts replacing its DMS-10s with CS 1500s. Also, Taqua's sales team will have to give carriers a reason not to embrace MetaSwitch's VOIP architecture, in which a centralized call agent manages a number of media gateways nearer the edge of the network.
Q: Why would a carrier choose Taqua, given its rocky history?
A: The company's management says Taqua is stable again. And they say Taqua will "not focus on being acquired or launching an IPO…" Also, VP of sales Todd Daniels will wash and detail your car.
Q: No IPO prospects? Are they serious?
A: You're right. It's probably reverse psychology. I'm going to check for an S-1 right now.
— Phil Harvey, Switcheroo Editor, Light Reading
Look closely at what comprises of the upper management team. Look at their background and find out why they are currently where they are. We all remember Frank Plastina, who got fired from Nortel because four years earlier he pronounced that VoIP was just another dying idea and that it would be in Nortel's best interest to stay away from it. Nice call Frank. Now it's the same Frank that came to Tekelec with the same mentality towards class 5 customers and convinced a completely confused and bewildered board of directors that the only way to succeed it to break apart the company and to focus on their bread-and-butter product; the Eagle. Nice vision Frank and company. And this is the same man that brought along all his ex-Nortel buddies to the greener grasses of Tekelec only to dump them into the Jaws of Charlie's GenBand. Guess the honeymoon is over.
I'm not about to drop my money, my reputation, my livelyhood, my kids college fund, my wife's anniversay gift, my house payment, and the future of my company and all those faithful employees that look to me for leadership and guidance into a company that more resembles a bleeding-heart soap opera than it does a high-tech telecommications company....I don't think so. If Taqua ever wishes to be a player in the real world it will have to understand some basic business principles:
(1) Without a profit you have nothing.
(2) If you re-use the management that got you here in the first place then you will end up with the same results.
(3) If you use one engineer for 16 hours as opposed to two engineers for 8 hours each then you will lose the ones that help you survive.
(4) If you ignore your customers, they will leave.
(5) If you sell your neighbor a new Lexus for $40 then your other neighbors will expect the same deal. It's a small neighborhood and they ALL talk.
(6) If you think that by driving a Hummer is impressing your customers then you are a fool.
(7) Getting new money does not equate to new success. You still need to execute.
(8) Having a third of your employees as managers is stupid. Simply an attempt to cover up multiple levels of incompetence.
(9) Quickly learn when to walk away from a sale.
Just to keep the record straight, I am not an employee of Tekelec or GenBand or Taqua although I do have friends employeed by all three. There was a time when I was a proud member of the Taqua family but Frank and company saw to it that the days of pride and ambition are long gone. Tekelec, a wonderful company with a long history of success, just did not have a clue what it was being suckered in to. Again, I salute Charlie for his ability to sell snow to eskimos.
What does this "new and improved" Taqua being to the world of Class 4/5? Can't say I have the answer but what I can tell you is that if it sounds like a duck and walks like a duck and smells like a duck then it must be a pig. Go figure.