Tekelec Reports 1Q Results

Tekelec TKLC recently reported first-quarter results. Our fair value estimate remains unchanged. Revenue was essentially flat, declining to $116.7 million, a modest 1% fall from the year-ago period. Orders during the quarter, a sign of future revenue, were down 18% and backlog fell to $360 million from $412 million in the prior-year period. Despite the downturn in orders and activity, management believes that it now has better visibility into clients' spending plans for the remainder of the year, removing a bit of uncertainty. Operating profit of $17.9 million was--like revenue--essentially unchanged from the year-ago quarter. The firm also managed to generate $20.6 million in cash from operations. We continue to believe that, despite near-term difficulties, Tekelec is well positioned with $230 million in cash, no debt, and a strong product lineup.