Policy + charging

Plastina Out, Prabhu In at Tekelec

After nearly five years at the helm, Tekelec President and CEO Frank Plastina has unexpectedly quit, with board member and telecom vendor veteran Krish Prabhu stepping in to take the reins on an interim basis while the company searches for a new full-time CEO. (See Tekelec CEO Quits, Guides Q4.)

Plastina's resignation comes as Tekelec issued a profits warning for 2010: It expects its full-year revenues to be in the range of US$415-425 million, compared with its previous guidance of $430-440 million, while non-GAAP earnings are set to be in the range of $0.62-67 instead of $0.75-80.

Plastina, who became CEO in February 2006, won't go away empty-handed, though, as his severance agreement means he will bank more than $2.5 million during the next 24 months and receive health care coverage over the same period. In addition, he will act as a consultant to Tekelec until the end of February at an unspecified daily rate.

Prabhu, formerly the CEO at Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA), has been on the Tekelec board since May 2008. In response to questions from Light Reading, a Tekelec spokesman did not rule out Prabhu as a potential candidate to be the permanent CEO. "Tekelec’s Board has formed a succession committee to conduct a search for a permanent CEO, with the goal of finding the best person for the job wherever he or she may come from," stated the spokesman in an e-mail. (See Tekelec Adds Prabhu and Prabhu Quits as Tellabs CEO .)

Investors seemed undecided about the impact of the news, as despite a pre-market dip, the vendor's share price held firm at $12.00 (down just one cent) when the Nasdaq opened Wednesday morning.

Why this matters
Tekelec, which has long relied on the mature signaling infrastructure market for its sales, is undergoing a transformation as it looks to its new Service Provider Information Technology (SPIT) assets -- the Policy and Charging Rules Function (PCRF) and subscriber data management (SDM) lines it acquired last year -- to drive revenue growth. (See Tekelec Splashes $165M on SPIT Specialists, Who Is Packing a PCRF? and The SPIT Manifesto.)

That transformation will be a tricky one (as the company's 2010 profit warning shows) and needs a steady hand at the helm of the management team. Plastina's decision to quit, then, could disrupt that transformation process as the company's staff, partners and customers wait to see who takes over, and whether the new CEO will tinker with the current strategy.

Of course, a new person at the helm might be just what Tekelec needs as it looks to secure leading positions in the growing PCRF and SDM markets, where it's still a relative newcomer. It's possible, then, that Tekelec's board will look for someone with more IT than telecom experience to take the company into the next phase of its development.

And the financial news isn't all bad for Tekelec, as much of its 2010 sales shortfall is the result of a delayed order in India (where little happens to schedule), with those revenues (about $10 million) due to be booked this year instead. In addition, the company notes that its fourth-quarter order book stood at $175-185 million, the second highest in its history.

For more
For more on recent Tekelec developments see the following articles:

— Ray Le Maistre, International Managing Editor, Light Reading

Sign In