Tekelec Reports Q3

MORRISVILLE, N.C. -- Tekelec (NASDAQ:TKLC - News), the broadband data management company, today announced earnings for the third quarter of 2010.

2010 Third Quarter Results from Operations
Revenue for the third quarter of 2010 was $108.3 million, down 6% compared to $114.9 million for the third quarter of 2009. The Company's orders were $81.1 million for the quarter, down 14% from the third quarter of 2009. Order input was down primarily due to a reduction in SS7 and Sigtran orders, with the majority of the decline coming from emerging markets. However, our next gen products continue to grow as a percentage of total orders, representing 37% of total orders booked during the current quarter. As of September 30, 2010, backlog was $253.6 million compared to $271.6 million as of June 30, 2010 and $336.7 million as of September 30, 2009.

GAAP gross margins for the third quarter of 2010 were 55%, compared to 66% in the third quarter of 2009. Non-GAAP gross margins for the third quarter of 2010 were 63%, compared to 68% for the third quarter of 2009. Please refer to the attached reconciliations of the non-GAAP financial measures referred to in this release to the most directly comparable GAAP measures.

On a GAAP basis, the Company reported a net loss for the third quarter of 2010 of $0.1 million, or $0.00 per diluted share, compared to earnings in the third quarter of 2009 of $9.4 million, or $0.14 per diluted share. GAAP operating margins were 0% for the third quarter of 2010 down from 19% for the third quarter of 2009.

On a non-GAAP basis, net income for the third quarter of 2010 was $10.2 million, or $0.15 per diluted share, compared to $18.2 million, or $0.27 per diluted share, for the third quarter of 2009. Non-GAAP operating margins for the third quarter of 2010 were 14%, compared to 23% for the third quarter of 2009.

Year-to-Date Results
For the first nine months of 2010, revenue was $333.8 million, down 3% compared to $345.8 million for the first nine months of 2009. For the first nine months of 2010, the Company's orders were $209.9 million, down 22% compared to $267.4 million for the first nine months of 2009.

On a GAAP basis, the Company reported net income of $23.0 million, or $0.33 per diluted share, for the first nine months of 2010, compared to $31.5 million, or $0.47 per diluted share, for the first nine months of 2009. GAAP operating margins were 11% and 17% for the nine months ended September 30, 2010 and 2009, respectively.

On a non-GAAP basis, net income for the first nine months of 2010 was $45.5 million, or $0.66 per diluted share, compared to $51.0 million, or $0.76 per diluted share, for the first nine months of 2009. Non-GAAP operating margins for the first nine months of 2010 were 20% compared to 22% for the first nine months of 2009.

Frank Plastina, Tekelec's president and chief executive officer, stated, "While Sigtran and SS7 solution orders are declining at a faster rate than we expected and have historically experienced, we are pleased with the increasing momentum of order input for our next-gen solutions. Specifically, this past quarter, our next gen products were 37% of total orders booked and have grown by nearly 50% year to date compared to 2009. Our next gen portfolio uniquely positions us to help our customers manage and monetize the explosive growth in mobile data traffic and multi-media applications."

Tekelec