Almost a year ago, The Deal reported on cash-flush network equipment manufacturer Tekelec Inc.'s plans to grow through acquisitions. Although the company hasn't bought a thing in the past year, apparently it's still looking, reports Lawrence Harris, who follows Tekelec for Oppenheimer & Co. Tekelec has $325 million in cash and would prefer deals over stock repurchases.
Every last telecom maker has been talking about deals — or been the subject of deal talk — for years. But despite some very high-profile deals between the largest equipment makers, many of the smaller players remain stuck in a holding pattern. They aren't being bought, and they aren't buying.
In May I blogged about equipment maker Tellabs Inc. shifting from a stance of looking for acquisitions to putting its cash into stock repurchases, and I said this move called into question how many good buys remained in the telecom space. Though Tekelec says it wants to do the opposite, you have to wonder why it hasn't found anything after a year of looking. Even Harris declined to name any good potential targets for Tekelec in his research note.
You also have to wonder what will become of all these small and midsized telecom equipment makers that can't seem to grow in any meaningful way and can't seem to attract any interested buyers. —Andrea Orr
See July 13, 2006, story on TheDeal.com on Tekelec
See recent blog on Tellabs
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