Tekelec Sets Big Charge

Tekelec (TKLC Quote - Cramer on TKLC - Stock Picks) set a $51 million asset-impairment charge and said it would restate financial results going back three years to reclassify customer-service charges.

The news comes just a week after the Morrisville, N.C., telecom switch company delayed the release of its fourth-quarter numbers to complete its annual audit.

On Tuesday, Tekelec said it would take a $22.7 million charge to write off Taqua-purchased technology and a $28.6 million charge for the impairment of goodwill associated with the Taqua reporting unit. The company said the charge "reflects the slower than anticipated pace at which the market is replacing small Class 5 switches, particularly in North America. We will continue to support our Taqua T 7000 products and customers while we focus on reducing our operating losses associated with the Taqua product line in 2006."

Tekelec said it identified certain customer-service costs that had historically been incorrectly classified in its consolidated statements of operations, resulting in an understatement of cost of goods sold and an equal overstatement of operating expenses.