Tekelec swings to 1Q profit, beats analysts' estimates

MORRISVILLE, N.C.—Network applications company Tekelec said Tuesday that it swung to a first-quarter profit from a year-ago quarter weighed down by a loss on discontinued operations.

Tekelec also increased its 2008 revenue and adjusted earnings outlook.

Tekelec shares finished trading up $1.38, or 9.5 percent, at $15.98. They earlier hit a year high of $16.17, eclipsing a previous high of $15.31 set last May.

For the quarter ended March 31, Tekelec earned $13.5 million, or 19 cents per share, compared with a loss of $50.5 million, or 72 cents per share, in the year-ago quarter.

On an adjusted basis, the company earned 25 cents per share from continuing operations.

In the year-ago quarter, Tekelec recorded a loss from discontinued operations of $53.5 million, or 76 per share, in relation to the operations and sale of its switching solutions group. In the first quarter of 2008, the company recorded income of $1.6 million, or 2 cents per share, for the settling of lease obligations related to that group.

Tekelec's first-quarter revenue rose to $118.2 million from $108.8 million.

Analysts polled by Thomson Financial expected a profit of 16 cents per share on $106.7 million in revenue. Analyst estimates generally exclude special items.

Tekelec said it added seven new customers in the first quarter.

The company's cost of sales fell to $40.5 million from $52.5 million.

In a conference call, Tekelec Chief Financial Officer Bill Everett said the company now expects revenue of $455 million to $470 million and adjusted earnings of 75 cents to 80 cents for the full year. Tekelec still expects full-year earnings of 55 cents to 59 cents per share.

In its fourth-quarter conference call in February, the company had predicted $455 million to $465 million in revenue and adjusted earnings of 72 cents to 76 cents per share.

Analysts anticipate a profit of 76 cents per share on $461.8 million in revenue.

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