Wednesday, telecommunications signaling and switching solutions provider Tekelec (TKLC) reported a sharp decline in profit for the second quarter, reflecting primarily an impairment charge and the absence of prior-year's tax gain. Adjusted earnings grew year-on-year and topped Street estimates by three pennies. The company also revised its full-year earnings view by upping the lower end of the earlier range.
For the quarter, the Morrisville, NC-based company's earnings plunged to $9.75 million or $0.14 per share from $15.32 million or $0.22 per share in the year-ago quarter.
On an adjusted basis, net income was $16.81 million or $0.25 per share compared to $15.70 million or $0.23 per share in the second quarter of fiscal 2008. On an average, five analysts polled by Thomson Reuters expected Tekelec to earn $0.22 per share. Analysts' estimates typically exclude special items.
Adjusted results exclude a non-cash impairment charge of $2.8 million or $0.04 per share related to a decrease in fair value of equity interest in Genband, a privately held investment. The prior-year quarter results included a tax benefit of $3.7 million, or $0.05 per share.
The company's revenues for the quarter were $114.18 million as against $116.42 million in the prior-year period. Analysts expected the company to generate revenues of $114.71 million during the period.
Quarterly orders declined 15% to $104.7 million from $122.9 million in the prior-year quarter. As of June 30, 2009, the company's backlog was $353.3 million as against $387.6 million as of June 30, 2008.
For the half year period, net profit declined to $22.12 million or $0.33 per share from $28.80 million or $0.41 per share in the comparable period prior year. Adjusted earnings for the six-month period were $32.84 million or $0.49 per share as against $33.96 million or $0.48 per share a year ago. Revenues for the year-to-date period were $230.84 million compared with $234.67 million in the same period last year.
In a previously announced guidance, Tekelec expected full year earnings to be between $0.63 and $0.73 per share and adjusted earnings per share to be between $0.85 and $0.95, on revenues of $440 million and $460 million.
Tekelec revised the guidance and currently expects revenues to be between $450 million and $460 million, and earnings to be between $0.63 and $0.68 per share. The company currently anticipates adjusted earnings per share to be in the range of $0.90 to $0.95, and estimates order entry to be between $420 million and $460 million.
Analysts expect the company to earn $0.92 per share on revenues of $456.68 million for the full year.
"Our orders in the first half of the year were consistent with our expectations and we continue to expect our orders to strengthen in the second half of the year," stated president and chief executive officer Frank Plastina.
TKLC closed Tuesday's regular trading at $18.53 per share on the Nasdaq.
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