Let's Make $87 Million Deals: Tekelec Buys One Firm, Exercises Buyout Option in Another

MORRISVILLE — Tekelec made not one but two major deals on Wednesday, acquiring a European software firm and buying out minority shareholders in a subsidiary.

Combined, the deals are worth more than $80 million.

On the same day Tekelec (Nasdaq: TKLC) announced a surge in sales and profits, the communications gear company also said it was buying Iptelorg GmbHm a routing software firm based in Germany and the Czech Republic. The deal cost Tekelec some $7 million in cash and another $4 million in stock.

The acquisition is a "key milestone" in Tekelec's goal of delivering converged communications for voice, video and data, the company said. The European firm is a developer of a key communications application called session initiation protocol (SIP).

The Iptelorg operation will become part of Tekelec's signaling group.

"We've been collaborating with Iptelorg for the past year because of the fast, purpose-built call session control function (CSCF) capabilities of its SIP Express Router," said Fred Lax, Tekelec's chief executive officer, in a statement. "What became clear to us was that we wanted to do more than license this technology -- we wanted to own it, build on it and make it a central part of our IMS strategy --")

IMS stands for Internet Protocol multimedia subsystem.

Tekelec, which is in the process of moving its headquarters to North Carolina from California, is a major player in the continuing evolution and deployment of Internet Protocol based digital packet networks both for wireless and wireline with applications such as Voice over Internet Protocol.

In the other deal, Tekelec exercised its option to buy out minority shareholders in Santera Systems, a switching subsidiary it formed two years ago, for $75.6 million in cash.

The quarterly earnings report, meanwhile, showed Tekelec generated a profit of $5.6 million, or 8 cents per share, on revenues of $133 million. A year ago, Tekelec lost $304,000 on revenues of $95.6 million.

"Tekelec's results were strong in the second quarter, with orders up 27 percent year-over-year and up 29 percent sequentially, and revenue increasing 39 percent year-over-year and up 11 percent sequentially," Lax said. "For the eleventh consecutive quarter, strong order volumes provided us with a book-to-bill ratio greater than one."

Tekelec: www.tekelec.com