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Secrets to Tekelec's success? The 'Patent Wall'

Tekelec's massive, growing "Patent Wall."

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Note: The Skinny blog is written by Rick Smith, editor and co-founder of Local Tech Wire and business editor of WRAL.com.

MORRISVILLE, N.C. – As visitors enter the massive headquarters for Telekec (Nasdaq: TKLC), one source of pride is impossible to escape.

The “Patent Wall.”

It grew by 27 in 2009, and another 110 applications were filed. Impressive, eh? (By the way, the number of patent filings worldwide decreased by 4.5 percent in recession-plagued 2009, according to the World Intellectual Property Organization.)

Intellectual property, research and development and rolling out of new software and services have positioned the company at the forefront of the booming global mobile data and phone business. Its text messaging and number management technology are the major reasons Tekelec grew in 2009 while virtually all other companies shrank – or maintain profits by slashing costs.

Frank Plastina, chief executive officer at Tekelec, had a great deal of positive news to discuss in a conference call with Wall Street analysts on Thursday. A report of a record year for profits and increases in sales plus projections for more growth in 2010 set Tekelec shares up more than 13 percent.

What are the secrets of succcess? There are multiple reasons, Plastina said, ranging from its advantages in technology and products to growing demand, such as texting and management of numbers for mobile devices. Plus, he believes Tekelec is delivering on customer support and quality.

Here are excerpts of Plastina’s discussion with analysts as provided by the Web site Seeking Alpha. And as you read through them, don’t forget the Patent Wall.

“Our continued success in the market is evidenced by our new customer wins. We added a total of five new customers during the quarter. In total we won 19 new customers last year and have won 59 new customers over the last three years. We now have products installed in 107 countries around the world. …

“Three years ago, our strategic plan set an objective of focusing our efforts on the controller of the network and migrating towards a software business model. Our financial results reflect the progress we have made in achieving this objective. This approach allows us to better leverage our base operating infrastructure as well as improve our ability to quickly develop applications that focus on the latest market opportunities. Our R&D efforts generated 118 patent applications and 27 issued patents last year.

“Our portfolio is focused on efficiently and securely enabling connections for our IP and mobile data networks…. Given the complex ecosystem that is developing within the mobile internet, new descriptions such as the network management and personalization plan are also indicative of the role our solutions play. …

“Specifically our solutions fit into three different functional areas of the mobile IP core. Session management, mobility management and network applications and databases. Within these functional areas the ongoing network evolution requires efficient solutions that replace proprietary hardware with software enabled platforms increasingly migrating towards cloud-based applications. To address this need, we are using the latest architecture and competing technologies in the industry such as application server and data clustering, as well as virtualization technology. …

“Now let's explore examples of the three mobile IP core functions …

“The Eagle XG SIP signaling router supports quality of service, SIP proxy routing, SIP session load balancing and we are introducing BIC to SIP signaling to the portfolio. We booked four new Eagle XG orders during the fourth quarter, including two expansion orders from existing Eagle XG customers….

“Our second functional area is mobility management. We have developed routing algorithms in both our Eagle and our Eagle XG products that drive efficiency through simplified network design and more efficient routing in the signaling layer. …

“Our third area of focus is network applications and databases. Number portability is an example of this functionality. We sold our Eagle XG SIP signaling router to handle number portability adjusted SIP routing to a second customer this quarter. We also continue to strengthen our number portability leadership and now have 97 operators in 33 countries. …

“Turning to mobile messaging, we continue to see service provider business models utilizing machine to machine messaging capabilities….Our mobile messaging application gateway allows the customer to offer new applications to businesses who need to monitor assets in multiple locations.”

No doubt, that technology is patented – or soon will be.

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The Skinny

WRAL Local Tech Wire Publisher and Editor Rick Smith dishes out tidbits from the local technology sector. Read more articles…