Tekelec Splashes $165M on SPIT Specialists
The company, which also announced its first-quarter results today, has agreed to pay $130 million for Camiant Inc. , one of the leading independent policy server vendors, with 30 carrier customers (including some very big names in the mobile and cable sectors) and 100 staff. The acquisition is expected to be completed in the next few days. (See Tekelec Reports Q1, CTIA 2010: Camiant Lands LTE Gig at Verizon, Camiant Touts Success, LTE Deal, Camiant Touts Policy Server Growth, Camiant Boasts New Customers, Kabel Deutschland Plugs In Camiant, and Camiant Plugs Policy Server Power .)
Speculation that Camiant was seeking a suitor has been circulating for some time, though Tekelec hadn't previously been mentioned as an interested party. (See Analyst Says Camiant Turned Down Juniper & Starent.)
Policy control has emerged as a critical capability in modern networks as operators look for ways to deal with the growing volumes of data in their networks. (See MWC Preview: Policy Vendors Strut Their Stuff, Policy Players Prosper, and Policy Matters to Mobile Broadband Operators.)
Tekelec has also just closed the $35 million acquisition of Blueslice Networks Inc. , a key player in the SDM market that is becoming increasingly important as service providers strive to implement better customer experience and marketing strategies, and to expose their customer data to third-party applications developers. (See SPIT Watch: Knowing Me, Knowing You.)
Blueslice has 19 customers and 50 staff. (See Blueslice Touts SDM Success and Blueslice Adds HSS for LTE.)
Handily, Blueslice and Camiant are already well known to each other. (See Camiant, Blueslice Team Up.)
The move positions Tekelec, which already generates close to half a billion dollars in annual revenues from its signaling gateways, number portability platform, mobile messaging platform, home location register, service broker, OSS products, and various IMS elements, as a significant player in the SPIT sector. (See The SPIT Manifesto, Who Makes What: Telecom Service Brokers, BSNL Picks Tekelec, and Tekelec Buys mBalance.)
In fact, the company claims it will be "the only player in the industry to uniquely blend and capture the synergies among session, policy, subscriber data management, network and business intelligence, and mobile messaging." And that gives it an opportunity to "help shape the definition of next-generation core networks as global service providers evolve to all-Internet protocol (IP) architectures such as long-term evolution (LTE) and IP multimedia subsystem (IMS)...
"Tekelec will provide a unique layer of intelligence that gives service providers new real-time abilities to manage their networks based on dynamic policy control, unified subscriber profiles, and market-leading session management, including network routing data." That's a neat package.
And a package that Tekelec needs, as revenues from its existing product lines are looking flaky. At the beginning of the year, Tekelec said it expected full year revenues to be $470 million to $480 million, but it now expects its current product portfolio to generate $455 million to $470 million.
Blueslice and Camiant combined are expected to add $20 million to Tekelec's full year revenues (which means Blueslice and Camiant combined are generating about $35 million in annual revenues).
However, "purchase accounting" procedures mean Tekelec expects to record only $10 million in revenues from its two new charges this year. That takes Tekelec's new full year revenue guidance to $465 million to $480 million.
Tekelec also noted that operating losses at Blueslice and Camiant, along with acquisition-related costs, will knock $0.10 off Tekelec's expected full year earnings, which are now expected to be in the range of $0.85 to $1.00.
The use of $165 million of cash reserves and the lowered guidance resulted in an early hit to Tekelec's share price, which dipped 5.5 percent in pre-market trading Thursday, to $16.59.
— Ray Le Maistre, International Managing Editor, Light Reading