Taqua FAQua

Taqua's back. Again.

Phil Harvey, Editor-in-Chief

May 18, 2007

4 Min Read
Taqua FAQua

5:30 PM -- From The Philter's Softswitch Soap Opera file, here's an FAQ that should bring you up to date on the happenings at the new (old) Taqua, as I understand it.

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

About the Author(s)

Phil Harvey

Editor-in-Chief, Light Reading

Phil Harvey has been a Light Reading writer and editor for more than 18 years combined. He began his second tour as the site's chief editor in April 2020.

His interest in speed and scale means he often covers optical networking and the foundational technologies powering the modern Internet.

Harvey covered networking, Internet infrastructure and dot-com mania in the late 90s for Silicon Valley magazines like UPSIDE and Red Herring before joining Light Reading (for the first time) in late 2000.

After moving to the Republic of Texas, Harvey spent eight years as a contributing tech writer for D CEO magazine, producing columns about tech advances in everything from supercomputing to cellphone recycling.

Harvey is an avid photographer and camera collector – if you accept that compulsive shopping and "collecting" are the same.

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