Oddo Securities analysts said revenues of 15.31 billion euros were better than their estimate of 15.21 billion and the consensus forecast of 15.11 million.

The number of new telecoms subscribers was "modest" as expected, but an improved mix allowed Bouygues Telecom to achieve a sequential increase in average revenue per user (ARPU), the analysts said in a note to clients, keeping a 'buy' recommendation and 52 euros target.

Analysts at CM-CIC Securities, maintaining a 'buy' rating and 66 euros target, said the construction division continued to perform well with further sustained growth, while growth at Bouygues Telecom was better than expected.

They expect Bouygues to raise its 2008 sales guidance of 32.5 billion euros when it releases first half profit figures on Aug 28.

"The high margin division, telecom, is doing better than expected, leading us to believe that a good surprise in terms of profitability is possible," Landsbanki Kepler analysts said.

"Although no comments were made on margins or order book, sales guidance looks cautious and valuation is cheap" and 10 times earnings, they said. Landsbanki Kepler has a 'Buy' stance, with a 75 euros target. Andrew Newby; Andrew.Newby@thomsonreuters.com an/jms/an/cmr

COPYRIGHT

Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.

MMMM

Mobile data services have become an important tool for generating revenue now that mobile handsets are used not only for voice calls but also for non-voice services such as messaging, music, video, etc. The shift in focus from voice to data services has largely been due to the decreasing growth of voice revenue and the increasing pressure on voice margins. As voice becomes commoditised, mobile operators need to look at other sources to generate income and this has provided the impetus to formulate and implement strategies to create successful data services that help increase overall data average revenue per user (ARPU).

This exciting new report identifies the successful strategies adopted by mobile network operators in advanced countries to drive data ARPU from the following data services:

Messaging services

- SMS

- Mobile e-mail

- Mobile IM

Non-messaging mobile services

- Mobile music

- Mobile games

- Mobile TV and video

- Mobile user generated content

- Mobile commerce

- Mobile portals

This report analyses the strategies that have been adopted by operators in both advanced and developing countries to make their data services successful and, thereby, drive up data ARPU. We have also covered the strategies adopted by a mobile handset vendor to push its mobile handsets, as they ultimately led to increased data ARPU for operators. For each case study, we have identified success indicators that explain why each of these cases has been profiled. We have also provided a brief introduction about the service around which the case has been developed. By analysing the strategies that have been adopted by operators and other players, we have highlighted the essential success factors for each of the data services.

The report also covers mobile data service trends in developing countries and the successful strategies adopted by mobile network operators in these countries to drive growth in mobile data ARPU.

This new report is the third instalment in our 'Growing Data Services Series' and follows on very specifically from our previous report titled 'Strategies for Creating End-User Demand for Mobile Data Services', which analysed the strategies adopted by the most successful operators worldwide for various mobile data services. That previous report also provided certain best practice recommendations for making a data service successful. This new report highlights recommendations made in the earlier study and compares them with examples of actual strategies adopted by mobile operators to make a data service successful. If you purchase this new study, we will include a copy of the previous study as a free bonus.

Case Studies in this all-new report include:

O2, UK: SMS

US market: SMS

Japan: Consumer mobile email

AT&T, US: Enterprise mobile email

SK Telecom, South Korea: Mobile IM

3, UK: Mobile IM

Orange, UK: Mobile music downloads

Verizon Wireless, US: Mobile music downloads

Verizon Wireless, US: Mobile games

NTT DoCoMo, Japan: Mobile credit card service

KDDI, Japan: Mobile web portal

SK Telecom, South Korea: Mobile Social Networking

3, UK: Mobile Video Sharing

O2, UK: Mobile Video Sharing

3, Italy: Broadcast mobile TV

Orange, France: Streaming mobile TV

Etisalat, UAE: Streaming mobile TV

Handset case study - iPhone from Apple: Effects on data ARPU

Bharti Airtel, India: Caller ringback tones

Vodafone, Egypt: Voice SMS

Vodacom, South Africa: Ad-funded Missed Call alerts

Vodafone, Egypt: Missed Call alerts

Vodafone and Safaricom, Kenya: Mobile banking

China Mobile, China: Mobile IM

Looking at the growth of non-voice mobile services from 2006 to 2013, we see how mobile data revenues, expressed as a percentage of total mobile services revenues, are growing form just 16 percent in 2006 to reach over 25 percent in 2012. As data service become increasingly important, operators and other players in the value chain must learn best practice operating procedures from class-leading services, and this report delivers those best practice procedures to you in a concise, easy-to-use format.

Building on our previous report, this new report refers back repeatedly to the findings from 'Strategies for Creating End-User Demand for Mobile Data Services', re-confirming our earlier conclusions and building and refining new best practice recommendations based on the new case studies we have conducted for this study. This builds into an excellent catalogue of best practice recommendations drawn from our analysis and also from real-world market experience.

Key features of this essential new market study

-Read 20 exciting new case studies from MNOs around the world

-Understand the go-to-market strategies for leading mobile data services

-Learn from best-in-class non-voice mobile services

-Examine how some MNOs are achieving world-leading high data ARPU

-Case studies from Orange France, Etisalat (UAE), China Mobile, KDDI (Japan), 3 Italia and more

-Includes a second bonus report FREE!

-Analyze how operators are driving non-voice service adoption

Learn all this and so much more in this fantastic new detailed 179-page market report.

Key Topics Covered:

Introduction

Strategies for Creating End-User Demand (SCEUD)--A Brief Synopsis

The Worldwide Mobile Market

Mobile Data Services--A Worldwide Overview

Mobile Data Services--A Worldwide Overview

Mobile Messaging Services

Mobile Entertainment Services

Other Data Services

Evolving Trends in the Worldwide Mobile Data Services Market

The Success of Mobile Data Services - Lessons from the Past

Short Messaging Service

Case Study 1: SMS, O2 UK

Case Study 2: The Growth of SMS in the US

Mobile E-mail

Case Study 1: The Success of Consumer Mobile E-mail in Japan

Case Study 2: The Success of Enterprise Mobile E-mail in the US - AT&T Mobility

Mobile Instant Messaging

Case Study 1: NateOn (Mobile Instant Messaging)--SK Telecom

Case Study 2: Windows Live Messenger & Yahoo Messenger--3 UK

Mobile Music--Full-track Downloads

Case Study 1: Orange Player--Orange UK

Case Study 2: V-CAST Music--Verizon Wireless

Mobile Gaming

Case Study: Mobile Gaming--Verizon Wireless

Mobile Payments

Case Study 1: DCMX (Mobile Credit Card Service)--NTT DoCoMo

Mobile Internet

Case Study 1: EZWeb--KDDI

Mobile User-Generated Content

Case Study 1: Mobile CyWorld (Mobile Social Networking--SK Telecom)

Case Study 2: EyeVibe (Mobile Video Sharing) -- 3 UK and O2 UK

Mobile TV

Case Study 1: Broadcast (DVB-H) Mobile TV--3 Italia

Case Study 2: Streaming Mobile TV-- Orange France

Case Study 3: Streaming Mobile TV Service--Etisalat, UAE

Role of Handsets in Driving Data ARPU

Case Study 1: Apple iPhone and Data ARPU

Mobile Data Services in Emerging Markets

Case Study 1: Caller Ringback Tone (Hello Tunes) -- Bharti Airtel (India)

Case Study 2: Voice SMS (Minicall)--Vodafone Egypt

Case Study 3: Ad-funded Missed Call Alert (Please Call Me) -- Vodacom (South Africa) and Vodafone (Egypt)

Case Study 4: Mobile Banking (M-PESA) -- Vodafone and Safaricom (Kenya)

Case Study 5: Mobile Instant Messaging (Fetion)--China Mobile

The Future of Mobile Data Services in Emerging Markets

Conclusion

Appendices

Glossary

Classifications

Companies Mentioned in this Report

About the Authors

Also available

Companies Mentioned:

- 3 Italia

- AOL

- Apple

- AT&T Wireless

- Baileys

- Bharti Airtel

- Bouygues Telecom

- Canal 7

- China Mobile

- China Record Corporation

- Coca-Cola

- Commercial Bank of Africa

- Credit Saison Co. Ltd

- Daiki Sound

- Dopod

- du (UAE)

- EMI

- Ericsson

- Etisalat

- Family Mart

- First Direct

- Fox Network

- Gameloft

- Globe Telecom

- Hutchison Whampoa Group

- Inertia Distribution

- KDDI

- Koch Entertainment

- KTF

- Lawson

- LG

- Maxis

- McDonalds

- Motorola

- Napster

- NEC

- Nokia

- MSN

- NTT DoCoMo

- O2 UK

- Orange France

- Orange UK

- Outside Music

- Palm

- Pepsi

- Research in Motion (RIM)

- Rubicon Consulting

- Safaricom

- Samsung

- SFR

- SK Telecom

- Smart

- Softbank Mobile

- Sony BMG

- Sony Ericsson

- Sony Picture Television

- Sprint Nextel

- Sumitomo Mitsui Cards

- Telecom Italia Mobile

- Tencent

- T-Mobile

- TU Media

- UC Card Co. Ltd.

- Universal

- Verizon Wireless

- Vodacom

- Vodafone

- Warner Music

- Yahoo

For more information visit http://www.researchandmarkets.com/research/37d601/strategies_for_dri

SOURCE: Research and Markets

Research and Markets
Laura Wood, Senior Manager
Fax from USA: 646-607-1907
Fax from rest of the world: +353-1-481-1716
press@researchandmarkets.com

For the second quarter of 2008, the Company had orders of $122.9 million, up 45% compared to $84.7 million for the second quarter of 2007. Revenue from continuing operations for the second quarter of 2008 was $116.4 million, up 6% compared to $110.0 million for the second quarter of 2007. Backlog from continuing operations as of June 30, 2008 was $387.6 million, up from $381.2 million at March 31, 2008.

On a GAAP basis, the Company reported income from continuing operations for the second quarter of 2008 of $15.3 million, or $0.22 per diluted share, which includes a one-time tax benefit of $3.7 million, or $0.05 per diluted share, from the utilization of certain capital losses generated by the sale of our switching business in 2007. This compares to income from continuing operations of $3.8 million, or $0.05 per diluted share, for the second quarter of 2007. On a Non-GAAP basis, income from continuing operations for the second quarter of 2008 was $15.7 million, or $0.23 per diluted share, compared to income from continuing operations of $9.0 million, or $0.12 per diluted share, for the second quarter of 2007. Please refer to the attached financial statement schedules for a reconciliation of the Company's GAAP operating results to its Non-GAAP operating results.

For the first six months of 2008, the Company had orders from continuing operations of $205.3 million, up 25% compared to $163.9 million for the first six months of 2007. Revenue from continuing operations for the first six months of 2008 was $234.7 million, up 7% compared to $218.8 million for the first six months of 2007. GAAP operating margins were 14% and 2% for the six months ended June 30, 2008 and 2007, respectively. Non-GAAP operating margins for the first six months of 2008 were 19% as compared with 11% in the first six months of 2007.

On a GAAP basis, the Company reported income from continuing operations for the first six months of 2008 of $27.2 million, or $0.39 per diluted share, which includes a one-time tax benefit of $3.7 million, or $0.05 per diluted share, compared to income from continuing operations of $6.8 million, or $0.10 per diluted share, for the first six months of 2007. On a Non-GAAP basis, income from continuing operations for the first six months of 2008 was $34.0 million, or $0.48 per diluted share, compared to income from continuing operations of $19.6 million, or $0.27 per diluted share, for the first six months of 2007. Cash flows from continuing operations for the six months ended June 30, 2008 were $56.9 million, up 24% compared to $45.9 million in the first six months of 2007. Please refer to the attached financial statement schedules for a reconciliation of the Company's GAAP operating results to its Non-GAAP operating results.

Frank Plastina, president and chief executive officer of Tekelec, stated "We were very pleased by our strong operating performance for the second quarter and first half of the year. Our level of new orders was particularly strong compared to a year ago and reflects our continued success in generating new customer wins and in responding to demand from existing customers for signaling capacity and other Tekelec products. We were also pleased by the continued strength of our operating margins and strong cash flows during the first six months of 2008."

Consolidated Results, Including the Impact of Discontinued Operations

On a GAAP basis, the Company generated net income of $15.3 million, or $0.22 per diluted share, which includes a one-time tax benefit of $3.7 million, or $0.05 per diluted share, for the three months ended June 30, 2008, compared to a net loss on a consolidated basis for the three months ended June 30, 2007 of $7.8 million, or $0.11 loss per diluted share. For the six months ended June 30, 2008, the Company generated consolidated net income on a GAAP basis of $28.8 million, or $0.41 per diluted share, which includes a one-time tax benefit of $3.7 million, or $0.05 per diluted share, compared with a consolidated net loss of $58.2 million, or $0.82 loss per diluted share in 2007.

Balance Sheet Results

Tekelec's consolidated cash, cash equivalents and short-term investments at June 30, 2008 totaled $190.1 million, down from $316.5 million at March 31, 2008, due primarily to the repayment of $125 million of Convertible Notes in June 2008. Deferred revenues were $192.1 million at June 30, 2008, up from $185.7 million at March 31, 2008.

At June 30, 2008, the Company continued to hold $119.7 million of Student Loan Auction Rate Securities ("SLARS") valued at fair value in accordance with FAS 115 and 157. This valuation reflects a decline in value of $4.3 million ($2.6 million net of tax) recorded in 2008. The decline in fair value is considered to be temporary and accordingly, the write-down is recorded in accumulated other comprehensive income within shareholders' equity. We have classified these SLARS as long-term investments at June 30, 2008 because it is uncertain when liquidity will return to the market. Since the end of the second quarter, five auction rate securities with a total par value of approximately $12.3 million were called by the issuers and redeemed at par value.

Stock Repurchase Program

As previously announced in March 2008, Tekelec's Board of Directors approved a stock repurchase program utilizing a Rule 10b5-1 plan that authorizes the Company to repurchase up to $50 million of the Company's common stock. The timing, duration and actual number of shares repurchased will depend on a variety of factors including price, regulatory requirements and other market conditions. The Company may terminate the repurchase program at any time. As of June 30, 2008, the Company had repurchased approximately 2.6 million shares at a total cost of approximately $33.7 million.

Conference Call

Tekelec has scheduled a conference call for Wednesday, August 6, 2008 for management to discuss second quarter and first half of 2008 results. The Company also plans to provide on its web site immediately prior to the call both GAAP and Non-GAAP financial measures (including GAAP reconciliations) for the second quarter and to discuss during this call certain forward looking information concerning the Company's prospects for 2008.

"Live" Webcast and Replay

Tekelec will host a live webcast of its conference call on Wednesday, August 6, 2008, at 8:00 a.m. EDT. To access the webcast, visit Tekelec's web site located at www.tekelec.com, enter the Investor Relations section and click on the webcast icon. A webcast replay will be available at approximately 11:00 a.m. on August 6th, and for 90 days thereafter.

Telephone Replay

A telephone replay of the call will also be available for one week after the live webcast by calling either (800) 642-1687 or (706) 645-9291, and entering the conference ID #55753150.

Non-GAAP Information

Certain Non-GAAP financial measures are included in this press release, including a full Non-GAAP statement of operations. In the calculation of these measures, Tekelec generally excludes certain items such as amortization of acquired intangibles, restructuring and other charges, non-cash stock-based compensation charges, acquisition-related charges, and unusual, non-recurring gains and charges. Tekelec believes that excluding such items provides investors and management with a representation of the Company's core operating performance and with information useful in assessing its prospects for the future and underlying trends in Tekelec's operating expenditures and continuing operations. Management uses such Non-GAAP measures and the resulting Non-GAAP statements of operations to (i) evaluate financial results, (ii) manage the Company's operations, and (iii) establish operational goals. Further, each of the individual Non-GAAP measures within the Non-GAAP statement of operations and the Non-GAAP statement of operations itself are utilized by the Company's management and board of directors to determine incentive compensation and evaluate key trends within the business. In addition, since the Company has historically reported Non-GAAP measures to the investment community, the Company believes the inclusion of this information provides consistency in our financial reporting. The attachments to this release provide a reconciliation of each of the Non-GAAP measures, including the full Non-GAAP statement of operations, referred to in this release to the most directly comparable GAAP measure. The Non-GAAP financial measures are not meant to be considered a substitute for the corresponding GAAP financial measures.

FORWARD-LOOKING STATEMENTS

Certain statements made in this press release are forward looking, reflect the Company's current intent, belief or expectations and involve certain risks and uncertainties. The Company's actual future performance may differ materially from such expectations as a result of important risk factors, which include, in addition to those identified in the Company's 2007 Form 10-K, First Quarter 2008 Form 10-Q and its other filings with the Securities and Exchange Commission, the impact of the liquidity crisis in the United States credit markets, valuation of Student Loan Auction Rate Securities, the timeliness and functional competitiveness of our product releases, our ability to maintain OEM, partner, and vendor support and supply relationships, changes in the market price of the Company's common stock and reductions in telecommunications carrier capital spending. The Company undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise.

About Tekelec

Tekelec leverages its global leadership in core multimedia session control and network intelligence to ensure scalable, secure and highly available communications. The company's leading signaling solutions enable the interworking of different network applications, technologies and protocols, providing a smooth transition to next-generation networks. Corporate headquarters are located near Research Triangle Park in Morrisville, N.C., U.S.A., with research and development facilities and sales offices throughout the world. For more information, please visit www.tekelec.com.

                               TEKELEC
    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1)

                                    Three Months     Six Months Ended
                                    Ended June 30,        June 30,
                                  -----------------  -----------------
                                    2008     2007      2008     2007
---------------------------------------------------  -----------------
                                   (Thousands, except per share data)
----------------------------------------------------------------------

Revenues                         $116,422 $109,984  $234,665 $218,777
Cost of sales:
   Cost of goods sold              42,392   46,774    82,338   98,676
   Amortization of purchased
    technology                        587      592     1,174    1,179
                                  -------- --------  -------- --------
      Total cost of sales          42,979   47,366    83,512   99,855
                                  -------- --------  -------- --------
      Gross profit                 73,443   62,618   151,153  118,922
                                  -------- --------  -------- --------
Operating expenses:
   Research and development        26,216   24,064    50,624   46,271
   Sales and marketing             18,906   18,309    37,110   36,974
   General and administrative      12,948   14,762    27,205   27,794
   Acquired in-process research
and development                         -        -     2,690        -
   Restructuring and other            293    2,511       243    2,511
   Amortization of intangible
    assets                            109       48       218       94
                                  -------- --------  -------- --------
      Total operating expenses     58,472   59,694   118,090  113,644
                                  -------- --------  -------- --------
Income from operations             14,971    2,924    33,063    5,278
Other income (expense), net:
   Interest income                  2,295    4,355     5,576    8,295
   Interest expense                  (779)    (956)   (1,911)  (1,851)
   Gain (loss) on sale of
    investments                         -       85        (2)     223
   Other, net                        (990)  (1,118)   (1,506)  (1,844)
                                  -------- --------  -------- --------
      Total other income, net         526    2,366     2,157    4,823
                                  -------- --------  -------- --------
Income from continuing
 operations before
provision for income taxes         15,497    5,290    35,220   10,101
Provision for income taxes            179    1,517     8,039    3,328
                                  -------- --------  -------- --------
Income from continuing
 operations                        15,318    3,773    27,181    6,773
Income (loss) from discontinued
 operations, net of taxes               -  (11,547)    1,618  (65,019)
                                  -------- --------  -------- --------
Net income (loss)                $ 15,318 $ (7,774) $ 28,799 $(58,246)
                                  ======== ========  ======== ========

Earnings per share from
 continuing operations:
   Basic                         $   0.23 $   0.05  $   0.41 $   0.10
   Diluted                           0.22     0.05      0.39     0.10

Earnings (loss) per share from
 discontinued operations:
   Basic                         $      - $  (0.17) $   0.02 $  (0.94)
   Diluted                              -    (0.16)     0.02    (0.92)

Earnings (loss) per share:
   Basic                         $   0.23 $  (0.11) $   0.43 $  (0.84)
   Diluted                           0.22    (0.11)     0.41    (0.82)

Weighted average number of
 shares
outstanding-continuing
 operations:
   Basic                           65,638   69,938    66,578   69,426
   Diluted                         71,953   71,151    73,076   70,699

Weighted average number of
 shares outstanding:
   Basic                           65,638   69,938    66,578   69,426
   Diluted                         71,953   71,151    73,076   70,699



(1) We operate under a thirteen-week calendar quarter. For financial
 statement presentation purposes, the reporting periods are referred
 to as ended on the last day of the calendar quarter. The accompanying
 Unaudited Condensed Consolidated Statements of Operations are for the
 thirteen and twenty-six weeks ended June 27, 2008 and June 29, 2007.

                               TEKELEC
UNAUDITED NON-GAAP STATEMENTS OF OPERATIONS FOR CONTINUING OPERATIONS
                                (1),(3)


                                     Three Months     Six Months Ended
                                     Ended June 30,       June 30,
                                    ----------------  ----------------
                                     2008     2007     2008     2007
------------------------------------------- --------  ------- --------
                                    (Thousands, except per share data)
----------------------------------------------------------------------

Revenues                           $116,422 $109,984 $234,665 $218,777
Cost of sales:
Cost of goods sold                   42,062   46,370   81,637   92,753
                                    -------  -------  -------  -------
Gross profit                         74,360   63,614  153,028  126,024
                                    -------  -------  -------  -------
Research and development             25,436   23,361   49,035   44,554
Sales and marketing                  18,227   17,516   35,684   35,164
General and administrative           11,132   12,629   22,921   22,806
                                    -------  -------  -------  -------
    Total operating expenses         54,795   53,506  107,640  102,524
                                    -------  -------  -------  -------
Income from operations               19,565   10,108   45,388   23,500
Interest and other income, net          526    2,366    2,157    4,823
                                    -------  -------  -------  -------
Income from continuing operations
 before
provision for income taxes           20,091   12,474   47,545   28,323
Provision for income taxes (2)        4,392    3,459   13,589    8,705
                                    -------  -------  -------  -------
Net income from continuing
 operations                        $ 15,699 $  9,015 $ 33,956 $ 19,618
                                    =======  =======  =======  =======

Earnings per share:
Basic                              $   0.24 $   0.13 $   0.51 $   0.28
Diluted                                0.23     0.12     0.48     0.27

Weighted average number of shares
 outstanding:
Basic                                65,638   69,938   66,578   69,426
Diluted                              71,953   77,512   73,076   77,060

Notes to Unaudited Non-GAAP Statements of Operations for Continuing
 Operations:


(1) Please refer to the attached reconciliations of the GAAP
 Statements of Operations to the above Non-GAAP Statements of
 Operations.

(2) The above Non-GAAP Statements of Operations assume Non-GAAP
 effective income tax rates of 22% and 28% for the three months ended
 June 30, 2008 and 2007, respectively. The above Non-GAAP Statements
 of Operations assume Non-GAAP effective income tax rates of 29% and
 31% for the six months ended June 30, 2008 and 2007, respectively.

(3) We operate under a thirteen-week calendar quarter. For financial
 statement presentation purposes, the reporting periods are referred
 to as ended on the last day of the calendar quarter. The accompanying
 Unaudited Non-GAAP Statements of Operations are for the thirteen and
 twenty-six weeks ended June 27, 2008 and June 29, 2007.

                               TEKELEC
           UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

                                                June 30,  December 31,
                                                --------  ------------
                                                  2008        2007
                                                --------  ------------
                                                 (Thousands, except
                                                      share data)
                    ASSETS
Current assets:
    Cash and cash equivalents                  $ 188,143 $     105,550
    Short-term investments, at fair value          2,000       313,922
                                                --------  ------------
        Total cash, cash equivalents and
         short-term investments                  190,143       419,472
    Accounts receivable, net                     141,870       147,092
    Inventories                                   21,973        20,543
    Income taxes receivable                       11,647        28,361
    Deferred income taxes                         43,059        18,793
    Deferred costs and prepaid commissions        58,715        57,203
    Prepaid expenses and other current assets      9,545        14,726
                                                --------  ------------
        Total current assets                     476,952       706,190
Long-term investments, at fair value             119,664             -
Property and equipment, net                       34,602        32,510
Investments in privately-held companies           18,553        18,553
Deferred income taxes, net                        72,802        83,418
Other assets                                       1,386         1,320
Goodwill                                          22,951        22,951
Intangible assets, net                            15,556        16,948
                                                --------  ------------
        Total assets                           $ 762,466 $     881,890
                                                ========  ============

     LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
    Accounts payable                           $  28,638 $      45,388
    Accrued expenses                              28,945        21,259
    Accrued compensation and related expenses     33,936        40,234
    Current portion of deferred revenues         182,144       166,274
    Convertible debt                                   -       125,000
    Liabilities associated with SSG                1,510         5,767
                                                --------  ------------
        Total current liabilities                275,173       403,922

Deferred income taxes                              1,182         1,295
Long-term portion of deferred revenues             9,947         8,917
Other long-term liabilities                        6,195         6,569
                                                --------  ------------
        Total liabilities                        292,497       420,703
                                                --------  ------------

Commitments and Contingencies

Shareholders' equity:
    Common stock, without par value,
     200,000,000 shares authorized; 65,822,913
     and 67,479,916 shares issued and
     outstanding, respectively                   301,027       319,761
    Retained earnings                            168,178       139,379
    Accumulated other comprehensive income           764         2,047
                                                --------  ------------
        Total shareholders' equity               469,969       461,187
                                                --------  ------------
        Total liabilities and shareholders'
         equity                                $ 762,466 $     881,890
                                                ========  ============

                               TEKELEC
      UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                             Six Months ended June 30,
                                             -------------------------
                                                  2008         2007
                                             --------------  ---------
                                                    (Thousands)
Cash flows from operating activities:
Net income (loss)                           $       28,799  $ (58,246)
Adjustments to reconcile net income (loss)
 to net cash provided by
    operating activities:
    Loss (income) from discontinued
     operations                                     (1,618)    65,019
    Loss (gain) on sale of investments                   2       (223)
    Loss on disposal of fixed assets                   279          -
    Provision for (recovery of) doubtful
     accounts and returns                              (84)       192
    Inventory write downs                            3,223      5,254
    Depreciation                                     8,465      7,707
    Amortization of intangibles                      1,392      1,273
    Amortization, other                                487        929
    Acquired in-process research and
     development                                     2,690          -
    Deferred income taxes                          (12,920)    (2,113)
    Stock-based compensation                         6,517      8,726
    Excess tax benefits from stock-based
     compensation                                   (1,234)    (2,912)
    Changes in operating assets and
     liabilities, net of business disposal:
        Accounts receivable                          5,105     43,228
        Inventories                                 (4,562)    (2,616)
        Deferred costs                              (1,512)    13,683
        Prepaid expenses and other current
         assets                                      4,416     14,589
        Accounts payable                           (16,627)      (535)
        Accrued expenses                             7,613    (14,851)
        Accrued compensation and related
         expenses                                   (7,281)    (7,713)
        Deferred revenues                           17,441    (37,003)
        Income taxes payable/receivable             16,340     11,525
                                             --------------  ---------
            Total adjustments                       28,132    104,159
                                             --------------  ---------
            Net cash provided by operating
             activities - continuing
             operations                             56,931     45,913
            Net cash used in operating
             activities - discontinued
             operations                             (1,767)   (16,571)
                                             --------------  ---------
            Net cash provided by operating
             activities                             55,164     29,342
                                             --------------  ---------

Cash flows from investing activities:
    Proceeds from sales and maturities of
     investments                                   772,583    332,918
    Purchases of investments                      (584,524)  (372,016)
    Purchases of property and equipment            (10,441)   (10,087)
    Payments related to acquired in-process
     research and development                       (2,690)         -
    Other non-operating assets                         (71)      (224)
                                             --------------  ---------
            Net cash provided by (used in)
             investing activities -
             continuing operations                 174,857    (49,409)
            Net cash provided by (used in)
             investing activities -
             discontinued operations                     -     (2,320)
                                             --------------  ---------
            Net cash provided by (used in)
             investing activities                  174,857    (51,729)
                                             --------------  ---------

Cash flows from financing activities:
    Repayment of convertible debt                 (125,000)         -
    Payments for repurchase of common stock        (33,700)         -
    Proceeds from issuance of common stock           9,547     20,234
    Excess tax benefits from stock-based
     compensation                                    1,234      2,912
                                             --------------  ---------
            Net cash provided by (used in)
             financing activities                 (147,919)    23,146
                                             --------------  ---------

Effect of exchange rate changes on cash                491        469
                                             --------------  ---------
            Net change in cash and cash
             equivalents                            82,593      1,228
Cash and cash equivalents, beginning of
 period                                            105,550     45,329
                                             --------------  ---------
Cash and cash equivalents, end of period    $      188,143  $  46,557
                                             ==============  =========

                               TEKELEC
      UNAUDITED IMPACT OF NON-GAAP ADJUSTMENTS ON NET INCOME (7)

                                 Three Months Ended June 30, 2008
----------------------------------------------------------------------

----------------------------------------------------------------------
                                GAAP                        Non-GAAP
                              Continuing                    Continuing
                              Operations Adjustments        Operations
----------------------------------------------------------------------

Revenues                        $116,422    $     -           $116,422
Cost of sales:
Cost of goods sold                42,392       (330)(1)         42,062
Amortization of purchased
 technology                          587       (587)(2)              -
----------------------------------------------------------------------
Total cost of sales               42,979       (917)            42,062
----------------------------------------------------------------------
Gross profit                      73,443        917             74,360
----------------------------------------------------------------------
Operating Expenses:
Research and development          26,216       (560)(1)         25,436
                                               (220)(3)
Sales and marketing               18,906       (679)(1)         18,227
General and administrative        12,948     (1,816)(1)         11,132
Restructuring and other              293       (289)(4)              -
                                                 (4)(1),(4)
Amortization of intangible
 assets                              109       (109)(2)              -
----------------------------------------------------------------------
Total operating expenses          58,472     (3,677)            54,795
----------------------------------------------------------------------
Income from operations            14,971      4,594             19,565
----------------------------------------------------------------------
Interest and other income,
 net                                 526          -                526
----------------------------------------------------------------------
Income from continuing
 operations before provision
for income taxes                  15,497      4,594             20,091
----------------------------------------------------------------------
Provision for income taxes           179      4,213 (5)          4,392
----------------------------------------------------------------------
Net income from continuing
 operations                     $ 15,318    $   381           $ 15,699
----------------------------------------------------------------------

Earnings per share:
Basic                           $   0.23                      $   0.24
Diluted (6)                         0.22                          0.23

Weighted average number of
 shares outstanding:
Basic                             65,638                        65,638
Diluted (6)                       71,953                        71,953


(1) The adjustments represent stock-based compensation expense
 recognized related to awards of stock options, restricted stock or
 restricted stock units and stock appreciation rights granted under
 our equity incentive plans and stock purchase rights granted under
 our employee stock purchase plan.

(2) The adjustments represent the amortization of purchased technology
 and other intangibles related to the acquisitions of Steleus and
 iptelorg.

(3) The adjustment represents consideration payable to the former
 Estacado employees that is contingent upon their continued employment
 by Tekelec.

(4) The adjustment represents the elimination of costs incurred during
 2008 related to our initiating a plan to centralize certain functions
 in our EAAA region.

(5) The adjustment represents the income tax effect of excluding
 second quarter discrete tax benefits totaling $3.7 million related to
 reversing a valuation allowance on deferred tax assets generated by
 the loss on sale of SSG. Also included in the adjustment is the
 income tax effect of footnotes (1), (2), (3) and (4) in order to
 reflect our Non-GAAP effective tax rate of 22%.

(6) For the three months ended June 30, 2008, the calculations of
 diluted earnings per share include a potential add-back to net income
 of $504,000 for assumed after-tax interest cost and 5,522,000
 weighted average shares related to the convertible debt using the
 "if-converted" method.

(7) We operate under a thirteen-week calendar quarter. For financial
 statement presentation purposes, the reporting periods are referred
 to as ended on the last day of the calendar quarter. The accompanying
 schedule of Unaudited Impact of Non-GAAP Adjustments on Net Income is
 for the thirteen weeks ended June 27, 2008.

                               TEKELEC
     UNAUDITED IMPACT OF NON-GAAP ADJUSTMENTS ON NET INCOME (10)

                                   Six Months Ended June 30, 2008
----------------------------------------------------------------------

----------------------------------------------------------------------
                                  GAAP                      Non-GAAP
                                Continuing                  Continuing
                                Operations   Adjustments    Operations
----------------------------------------------------------------------

Revenues                          $234,665 $      -           $234,665
Cost of sales:
Cost of goods sold                  82,338     (701)(1)         81,637
Amortization of purchased
 technology                          1,174   (1,174)(2)              -
----------------------------------------------------------------------
Total cost of sales                 83,512   (1,875)            81,637
----------------------------------------------------------------------
Gross profit                       151,153    1,875            153,028
----------------------------------------------------------------------
Operating Expenses:
Research and development            50,624   (1,222)(1)         49,035
                                               (367)(3)
Sales and marketing                 37,110   (1,426)(1)         35,684
General and administrative          27,205   (3,384)(1)         22,921
                                               (900)(4)
Acquired in-process research
 and development                     2,690   (2,690)(5)              -
Restructuring and other                243     (459)(6)              -
                                                216 (1),(6)
Amortization of intangible
 assets                                218     (218)(2)              -
----------------------------------------------------------------------
Total operating expenses           118,090  (10,450)           107,640
----------------------------------------------------------------------
Income from operations              33,063   12,325             45,388
----------------------------------------------------------------------
Interest and other income, net       2,157        -              2,157
----------------------------------------------------------------------
Income from continuing
 operations before provision
for income taxes                    35,220   12,325             47,545
----------------------------------------------------------------------
Provision for income taxes           8,039    5,550 (7)         13,589
----------------------------------------------------------------------
Income from continuing
 operations                         27,181    6,775             33,956
----------------------------------------------------------------------
Income from discontinued
 operations, net of taxes            1,618   (1,618)(8)              -
----------------------------------------------------------------------
Net income                        $ 28,799 $  5,157           $ 33,956
----------------------------------------------------------------------

Earnings per share from
 continuing operations:
Basic                             $   0.41                    $   0.51
Diluted (9)                           0.39                        0.48

Earnings per share:
Basic                             $   0.43                    $   0.51
Diluted (9)                           0.41                        0.48

Weighted average number of
 shares outstanding:
Basic                               66,578                      66,578
Diluted (9)                         73,076                      73,076


(1) The adjustments represent stock-based compensation expense
 recognized related to awards of stock options, restricted stock or
 restricted stock units and stock appreciation rights granted under
 our equity incentive plans and stock purchase rights granted under
 our employee stock purchase plan.

(2) The adjustments represent the amortization of purchased technology
 and other intangibles related to the acquisitions of Steleus and
 iptelorg.

(3) The adjustment represents consideration payable to the former
 Estacado employees that is contingent upon their continued employment
 by Tekelec.

(4) The adjustment represents an arbitration judgment and associated
 legal fees in favor of our former President and CEO, Fred Lax.

(5) The adjustment represents acquired in-process research and
 development related to the Estacado purchase.

(6) The adjustment represents the elimination of costs incurred during
 2008 related to our initiating a plan to centralize certain functions
 in our EAAA region and changes in estimates related to our 2007
 realignment activities.

(7) The adjustment represents the income tax effect of excluding
 second quarter discrete tax benefits totaling $3.7 million related to
 reversing a valuation allowance on deferred tax assets generated by
 the loss on sale of SSG. Also included in the adjustment is the
 income tax effect of footnotes (1), (2), (3), (4), (5) and (6) in
 order to reflect our Non-GAAP effective tax rate of 29%.

(8) The adjustment represents the elimination of our discontinued
 operations.

(9) For the six months ended June 30, 2008, the calculations of
 diluted earnings per share include a potential add-back to net income
 of $1,085,000 for assumed after-tax interest cost and 5,942,000
 weighted average shares related to the convertible debt using the
 "if-converted" method.

(10) We operate under a thirteen-week calendar quarter. For financial
 statement presentation purposes, the reporting periods are referred
 to as ended on the last day of the calendar quarter. The accompanying
 schedule of Unaudited Impact of Non-GAAP Adjustments on Net Income is
 for the twenty-six weeks ended June 27, 2008.

                               TEKELEC
      UNAUDITED IMPACT OF NON-GAAP ADJUSTMENTS ON NET INCOME (8)


                                   Three Months Ended June 30, 2007
----------------------------------------------------------------------

----------------------------------------------------------------------
                                    GAAP                    Non-GAAP
                                  Continuing                Continuing
                                  Operations Adjustments    Operations
----------------------------------------------------------------------

Revenues                           $109,984     $     -       $109,984
Cost of sales:
Cost of goods sold                   46,774        (404)(1)     46,370

Amortization of purchased
 technology                             592        (592)(2)          -
----------------------------------------------------------------------
Total cost of sales                  47,366        (996)        46,370
----------------------------------------------------------------------
Gross profit                         62,618         996         63,614
----------------------------------------------------------------------
Operating Expenses:
Research and development             24,064        (703)(1)     23,361
Sales and marketing                  18,309        (793)(1)     17,516
General and administrative           14,762      (2,090)(1)     12,629
                                                    (43)(3)

Restructuring and other               2,511      (2,511)(4)          -
Amortization of intangible
 assets                                  48         (48)(2)          -
----------------------------------------------------------------------
Total operating expenses             59,694      (6,188)        53,506
----------------------------------------------------------------------
Income from operations                2,924       7,184         10,108
----------------------------------------------------------------------
Interest and other income, net        2,366           -          2,366
----------------------------------------------------------------------
Income from continuing
 operations before provision for
 income taxes                         5,290       7,184         12,474
----------------------------------------------------------------------
Provision for income taxes            1,517       1,942 (5)      3,459
----------------------------------------------------------------------
Income from continuing
 operations                           3,773       5,242          9,015
----------------------------------------------------------------------
Loss from discontinued
 operations for SSG, net of
 taxes                              (11,547)     11,547 (6)          -
----------------------------------------------------------------------
Net income (loss)                  $ (7,774)    $16,789       $  9,015
----------------------------------------------------------------------

Earnings per share from
 continuing operations:
Basic                              $   0.05                   $   0.13
Diluted (7)                            0.05                       0.12

Earnings (loss) per share:
Basic                              $  (0.11)                  $   0.13
Diluted (7)                           (0.11)                      0.12

Weighted average number of
 shares outstanding:
Basic                                69,938                     69,938
Diluted (7)                          71,151                     77,512


(1) The adjustments represent stock-based compensation expense
 recognized related to awards of stock options, restricted stock or
 restricted stock units and stock appreciation rights granted under
 our equity incentive plans and stock purchase rights granted under
 our employee stock purchase plan.

(2) The adjustments represent the amortization of purchased technology
 and other intangibles related to the acquisitions of Steleus and
 iptelorg.

(3) The adjustment represents the legal expenses incurred to settle
 the Bouygues litigation.

(4) The adjustment represents the impact of the June 2007
 restructuring.

(5) The adjustment represents the income tax effect of footnotes (1),
 (2), (3) and (4) in order to reflect our Non-GAAP effective tax rate
 of 28%.

(6) The adjustment represents the elimination of our discontinued
 operations.

(7) For the three months ended June 30, 2007, the calculations of
 diluted earnings per share related to GAAP Continuing Operations
 exclude a potential add-back to net income of $581,000 for assumed
 after-tax interest cost and 6,361,000 weighted average shares related
 to the convertible debt using the "if-converted" method as the effect
 of including such amounts is anti-dilutive. The calculation of
 diluted earnings per share related to Non-GAAP Continuing Operations
 includes the add-back to net income of $581,000 for assumed after-tax
 interest cost and 6,361,000 weighted average shares related to the
 convertible debt using the "if-converted" method.

(8) We operate under a thirteen-week calendar quarter. For financial
 statement presentation purposes, the reporting periods are referred
 to as ended on the last day of the calendar quarter. The accompanying
 schedule of Unaudited Impact of Non-GAAP Adjustments on Net Income is
 for the thirteen weeks ended June 29, 2007.

                               TEKELEC
      UNAUDITED IMPACT OF NON-GAAP ADJUSTMENTS ON NET INCOME (9)


                                    Six Months Ended June 30, 2007
----------------------------------------------------------------------

----------------------------------------------------------------------
                                    GAAP                    Non-GAAP
                                  Continuing                Continuing
                                  Operations Adjustments    Operations
----------------------------------------------------------------------

Revenues                            218,777    $      -       $218,777
Cost of sales:
Cost of goods sold                   98,676        (923)(1)     92,753
                                                 (5,000)(2)
Amortization of purchased
 technology                           1,179      (1,179)(3)          -
----------------------------------------------------------------------
Total cost of sales                  99,855      (7,102)        92,753
----------------------------------------------------------------------
Gross profit                        118,922       7,102        126,024
----------------------------------------------------------------------
Operating Expenses:
Research and development             46,271      (1,717)(1)     44,554
Sales and marketing                  36,974      (1,810)(1)     35,164
General and administrative           27,794      (4,276)(1)     22,806
                                                   (712)(4)

Restructuring and other               2,511      (2,511)(5)          -
Amortization of intangible
 assets                                  94         (94)(3)          -
----------------------------------------------------------------------
Total operating expenses            113,644     (11,120)       102,524
----------------------------------------------------------------------
Income from operations                5,278      18,222         23,500
----------------------------------------------------------------------
Interest and other income, net        4,823           -          4,823
----------------------------------------------------------------------
Income from continuing
 operations before provision for
 income taxes                        10,101      18,222         28,323
----------------------------------------------------------------------
Provision for income taxes            3,328       5,377 (6)      8,705
----------------------------------------------------------------------
Income from continuing
 operations                           6,773      12,845         19,618
----------------------------------------------------------------------
Loss from discontinued
 operations for SSG, net of
 taxes                              (65,019)     65,019 (7)          -
----------------------------------------------------------------------
Net income (loss)                  $(58,246)   $ 77,864       $ 19,618
----------------------------------------------------------------------

Earnings per share from
 continuing operations:
Basic                              $   0.10                   $   0.28
Diluted (8)                            0.10                       0.27

Earnings (loss) per share:
Basic                              $  (0.84)                  $   0.28
Diluted (8)                           (0.82)                      0.27

Weighted average number of
 shares outstanding:
Basic                                69,426                     69,426
Diluted (8)                          70,699                     77,060


(1) The adjustments represent stock-based compensation expense
 recognized related to awards of stock options, restricted stock or
 restricted stock units and stock appreciation rights granted under
 our equity incentive plans and stock purchase rights granted under
 our employee stock purchase plan.

(2) The adjustments represent the charge associated with product
 credits issued to Bouygues Telecom, S.A. as part of our settlement of
 the Bouygues litigation.

(3) The adjustments represent the amortization of purchased technology
 and other intangibles related to the acquisitions of Steleus and
 iptelorg.

(4) The adjustment represents legal expenses incurred to settle the
 Bouygues litigation.

(5) In the second quarter of 2007 we initiated a restructuring of our
 operations to better align with our current organizational
 requirements. This adjustment represents the elimination of the costs
 associated with the June restructuring.

(6) The adjustment represents the income tax effect of footnotes (1),
 (2), (3), (4) and (5) in order to reflect our Non-GAAP effective tax
 rate of 31%.

(7) The adjustment represents the elimination of the results of
 operations of our discontinued operations.

(8) For the six months ended June 30, 2007, the calculations of
 diluted earnings per share related to GAAP Continuing Operations
 exclude a potential add-back to net income of $1,162,000 for assumed
 after-tax interest cost and 6,361,000 weighted average shares related
 to the convertible debt using the "if-converted" method as the effect
 of including such amounts is anti-dilutive. The calculation of
 diluted earnings per share related to Non-GAAP Continuing Operations
 includes the add-back to net income of $1,162,000 for assumed after-
 tax interest cost and 6,361,000 weighted average shares related to
 the convertible debt using the "if-converted" method.

(9) We operate under a thirteen-week calendar quarter. For financial
 statement presentation purposes, the reporting periods are referred
 to as ended on the last day of the calendar quarter. The accompanying
 schedule of Unaudited Impact of Non-GAAP Adjustments on Net Income is
 for the twenty-six weeks ended June 29, 2007.

SOURCE: Tekelec

Tekelec Investor Contact:
Joanne Latham, 1-919-653-9655
Director of Corporate Communications
Joanne.Latham@tekelec.com

The number of new telecoms subscribers was "modest" as expected but an improved mix allowed Bouygues Telecom to achieve a sequential increase in average revenue per user (ARPU), the analysts said in a note to clients, keeping a 'buy' recommendation and 52 euros target.

Natixis Securities also reiterated a 'buy' opinion, saying that business remains strong both in Bouygues' telecoms and construction divisions.

They expect the company to raise its full year guidance for construction when it announces first half earnings on Aug 28.

Andrew Newby; Andrew.Newby@thomsonreuters.com an/jms

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