Tekelec has a market cap of $940.8 million; its shares were traded at around $13.77 with a P/E ratio of 14.3 and P/S ratio of 2. TKLC is in the portfolios of Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC, George Soros of Soros Fund Management LLC.
Highlight of Business Operations:In the second quarter of 2010, our revenues declined by 4% from $114.2 million to $109.5 million as compared to the second quarter of 2009, and on a year-to-date basis, our revenues declined by 2%, from $230.8 million in the first half of 2009 to $225.5 million in the first half of 2010. Historically, a substantial portion of our revenues were derived from existing backlog, and trends in our orders have not been reflected in our revenues in the same period. However, given the recent declines in our orders and resulting backlog, our revenues are beginning to be negatively impacted by the recent trend in orders. Our revenues and operating results may become more sensitive to, and more closely follow recent order trends in the future if our existing backlog continues to decline as a result of several sequential periods with lower than anticipated orders.
Operating Income decreased by $7.0 million from $19.6 million in the second quarter of 2009 to $12.7 million in the second quarter of 2010, primarily due to a reduction in revenues of $4.7 million and an increase in amortization expense of $2.5 million as a result of the additions of intangible assets following acquisitions of Camiant, Inc. (Camiant) and Blueslice Networks Inc. (Blueslice) completed in the second quarter of 2010. Partially offsetting these items was a decrease in incentive compensation in line with lower orders and operating performance as compared to our incentive targets for the period.
Diluted Earnings per Share remained comparable at $0.14 per share in the second quarter of 2010 and 2009, and at $0.34 per share in 2010 and $0.33 per share in 2009 on a year-to-date basis, primarily due to the decreases in operating income during the three and six months ended June 30, 2010 discussed above being offset by lower income tax expense, as well as first half 2009 including an impairment charge of $2.8 million related to investments in privately held company recorded during the second quarter of 2009.
Working Capital decreased by $145.8 million, or 33%, from $441.3 million as of December 31, 2009 to $295.5 million as of June 30, 2010, primarily due to the reduction in our cash balances as a result of acquiring Camiant and Blueslice in the second quarter of 2010 for total net cash consideration of $162.0 million, partially offset by cash inflow from operating activities of $21.2 million.
Shareholders Equity increased by $26.8 million in the six months ended June 30, 2010 from $574.6 million as of December 31, 2009 to $601.4 million as of June 30, 2010, primarily due to net income of $23.1 million for the period and $9.9 million of proceeds from the issuance of common stock pursuant to the exercise of employee stock options and purchase under our employee stock purchase plan, offset by foreign currency translation adjustments of $10.4 million.
Revenues decreased by 4% to $109.5 million in the second quarter of 2010 from $114.2 million in the second quarter of 2009. On a year-to-date basis, revenue decreased by 2% to $225.5 million for the six months ended June 30, 2010 as compared to $230.8 million for the six months ended June 30, 2009. Foreign currency fluctuations had a negative year-over-year impact on second quarter and year-to-date 2010 revenues of approximately $4.0 million and $2.0 million, respectively. The following discussion provides a more detailed analysis of changes in revenues by product line.
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