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Morrisville tech company to cut 15 percent

Posted May 5, 2011

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— Morrisville-based Tekelec (NASDAQ: TKLC) plans to cut up to 15 percent of its workforce as part of the continued restructuring effort announced earlier in the year. In February, Tekelec announced an aggressive cost-cutting strategy but said layoffs would be a last resort. 

The company has approximately 1,250 employees worldwide in 25 offices. The Morrisville headquarters employs 675. It has not yet released specifics on how many jobs would be lost in the Triangle.

“We also had to make some tough decisions during the quarter and initiated changes to improve the operating performance of the company by aligning our cost structure,” said Krish Prabhu, interim president and CEO.

Tekelec also forecast in February that a tough year lie ahead for the company in 2011; with revenues estimated to be between $360 and $400 million. That's well below 2010's revenues of $424 million.

The company announced earnings for the first quarter 2011 Thursday. Revenue was $107.8 million, down 7 percent from first quarter 2010. Orders are up 22 percent from the same period in 2010, suggesting that the company's move into next-gen technology is gaining ground.

As the company tries to align costs with expected growth, job reductions could continue through the end of 2011.

Tekelec shares closed Wednesday at $8.15, up 13 cents. The stock has lost more than half its value in the past year.

43 Comments

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  • whatelseisnew May 5, 2011

    Layoffs a last resort. Nonsense. Labor costs are a huge expense and you have to balance the savings realized with the ability to continue to function as a company.

  • westernwake1 May 5, 2011

    @fzero "There already is a corporate AMT, but much like the personal one, it is useless and outdated."

    Yeah, you are right. Like many pieces of our complex tax code.

  • fzero May 5, 2011

    There already is a corporate AMT, but much like the personal one, it is useless and outdated.

  • westernwake1 May 5, 2011

    Thie issue with large corporations in the U.S. is that the merginal tax rate may be 35% but the effective tax rate is usually close to zero. There are some exceptions, the tax rate of Walmart and many oil companies are close to 35%.

    The primary problem is that most smaller C corporations in the U.S. will pay near the 35% tax rate while nearly all the large Fortune 500 corporations pay a much smaller percentage. All of these multi-national companies have all sorts of accounting tricks.

    Additional issues include that the incentives in the corporate tax system are all wrong. There should be solid incentives for hiring, R&D, and equipment purchase - most incentives today are given for financial magic - not things that improve our competitiveness.

    There probably needs some alternative minimum tax put in place for large corporations to insure that none have a zero percentage tax rate when they have large profits.

  • A Libertarian May 5, 2011

    ghimmy - you may not if stockholders get another penny but I do. And with people like my buying into these companies, the companies do not exist. If the leberals raise corp taxes and push union rules, I either take my money out or company goes outside of US where they can survice and thrive. Why do I want to invest in a company that will just fold due to high tax rates, insane regs and unjust union rules. I will not and companies will cease to exist. You can spout all the liberal opoints you want, but I will repeat!!! Companies will and should do what is in their best interest if they want to survive and thrive!!! For you liberals and socialist out there, socialism has never worked elsewhere and will not work here either!!!

  • bigal02282 May 5, 2011

    It is useless to try to talk sense to Johnny+3. His mind was surrendered long ago and he is no longer one of the functioning adults here. The infecto-o-meter reading on him is 97.39% which effectively makes him a RepZombie. The vaccine does NOT work and no more should have to suffer trying to reanimate the living dead. Let him go. You will need to try and save yourselves now.

  • wralgolo1234 May 5, 2011

    Weak senior management, weaker board of directors, single digit stock price = sinking ship...

  • A Libertarian May 5, 2011

    westernwake - sounds like you need another job huh. Look at the SEC filings and you will see the actual 10K and 10Q. You obviously do not know what you are looking at. Not some numbers you make up.

  • ghimmy51 May 5, 2011

    As NC "dumbs down" due to blind cost cutting you will see more unemployment as companies seek more qualified employees elsewhere. It's a shame. I prefer slow but steady growth from the worst recession in history and average people's lives getting better. I really don't care if the rich can get one more limo or the stockholders can get another penny on their earnings.

  • fzero May 5, 2011

    "Yes, I have seen their 10K and 10Q and their effective rates are quite high as most US companies are. The only ones with zero rates are the GE's in the world with close ties to OBAMA. The others with zero rates are with earnings outside US. US cannot tax foreign earnings. It helps that you know what you are talking about instead of looking like a BOZO!"

    Wow. Name calling. BTW, which 10-k or Q were you reading since you know how to read them and all? I'm also seeing that they paid more to foreign countries for income tax than they did to the US by far. Much like WesternWake1, I also do this for a living. And GE may have ties with OBAMA, but realize they have one of the largest tax departments in the US. They know every loophole and take advantage of it.

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