[Beginning of Cramer's verbatim comments for this segment...]

Jim:          For speculation Friday, I want to put a spotlight on the speculative tech stocks that have been left behind… I call them the forgotten tech specs… actually there is really only one of them… and the name is Tekelec (TKLC)… while the stocks in the mobile internet index that I created on August 11th, that was a way to measure the smart phone revolution… you know they are up an average of over 13%… the S&P is up about half of that, 7.5%… Tekelec is flat since I created the index… flat.. that is a travesty… by the way, the speculative stocks that I have recommended since early May… they have done even better… they are up an average of 30%… that is leaving my new fave Tekelec in the dust...

It is an underperformer… but I think that it has what it takes to become a 57 varieties Heinz catch up play… now I like these speculative tech stocks… I really do… and as part of a field bet on the guts on the mobile internet, they are terrific… now it is either smart phone components or wireless network equipment makers… now in a field bet that I discuss in Jim Cramer's Real Money: Sane Investing In An Insane World… and I elaborate in my new book coming out next month, Jim Cramer’s Getting Back To Even, your personal economic recovery plan… you take a bunch of positions in a basket of small speculative stocks in an industry that you think is going to roar… do not want to be left out… Tekelec should be part of your mobile internet basket… precisely because it is the stock that has not gone anywhere… therefore, I regard it as undiscovered vs. the rest… I think that it has huge upside.

The stock is massively under covered by the brokerage houses… only 7 analysts follow it… only one of them likes it enough to give it a buy… I think that is nuts… when you consider the fundamentals that I am about to run down for this company… Tekelec is a telco equipment supplier… that produces equipment for a particular kind of business that you and I both know that if you have kids you definitely know it is red hot… transmitting text messages… and also managing voice traffic on wireless networks… but text is so big that the technology… this is another one for those of you who have ever switched carriers… it lets you keep your phone number when you switch carriers.. it is called local number portability… it is a market where it has 35% share… come on that is gigantic.

These are all the things that wireless providers have to buy in order to build out the mobile internet… you know we have talked about how we just do not have the infrastructure to support so many smart phones… especially those bandwidth hogging iPhones… Tekelec helps the carriers deal with that when it comes to text messaging and talking… okay, maybe it is not as sexy as video… but it is vital to the growth of modern wireless networks that can support the mobile internet… text messaging, we know that is gigantic… in the US, messaging traffic at AT&T, Verizon, and T-Mobile was up 12% from the previous quarter… up 80% from the previous year… with maybe a little under half of that coming from my kids.. don’t you want to own the company with the tech that is making texting possible.

Okay Cramer, I hear you saying, if Tekelec is so great why has it lagged all of the other stocks that you recommended… simple… Tekelec got crushed from August 4th to August 6th after reporting earnings… the stock has yet to recover from that sale off… it is more than a month ago… it sold off after reporting a .04 cents earnings beat… in other words, better than expected… delivered in line guidance… but there was a flaw… a lot of the damage was caused by investors who had caught the run in Tekelec from $11.30 to $19.64... and I think they were taking money off of the table.

The problems with the quarter… okay, even though demand in emerging markets has picked up… developed markets still have not gotten off the ground… like us… I am not worried here… Tekelec saw some signaling orders coming from the US customers like Verizon , AT&T… boy that stock did well today… and we know that they have only just begun to spend on the mobile internet build out… which is why Tekelec’s management expects order trends to improve in the second half… I believe Tekelec… I think the real reason, frankly, for Tekele’s pollaxing has to do with India… which has the fastest growing wireless network in the world… something, of course, you would have had a hint of if you watched “Slum Dog Millionaire”.

Local number portability… Tekelec’s big business… was supposed to launch in India by the end of the September… it did not… by now it is expected to happen by the end of the year… fingers crossed… as Tekelec already does business with five of the top seven carriers with India… and controls more than a third of the market for local number portability… India should be gigantic for them… that is why I do not mind the delay… I do not think the delay matters… Tekelec was not expecting local number portability to hit its income statement this year anyway… because of revenue recognition rules… so the delay will not hurt the numbers… I think this is the time.

International opportunity still very much alive… with the US now picking up, Tekelec is, yes, a speculative buy… there are 10 more countries implementing local number portability in the next two year… Argentina, Brazil, China, Chile, Ecuador, Peru, Russia, Thailand, Turkey… come on, on the text messaging side, carriers are getting even more competitive… Sprint now coming out with that plan, unlimited internet access, texting, email, TV, music, GPS navigation, $70 a month… I may have to switch to that… that is the lowest price yet… now Sprint is desperate for business, but the other carriers will likely have to follow suit… and that means more demand for Tekelec’s signaling and equipment… and we liked that Palm number last night… 800,000 Pre‘s is pretty good.

Tekelec is a $16 stock and it has $4 in cash… it has no debt… you back out the cash… 12 times earnings… that is not a whole lot lower the stock can go without starting to attract real buyers, so to speak… Tekelec is expected to earn a $1 in 2010... I think that is conservative… I think that it can go $1.35... that would make it 16 times earnings, the current multiple… you have a $21 stock... but if it gets a higher more reasonable multiple…look, I could argue 20 times… it is a $27 stock masquerading as a $16 stock… that might be as much as a 68 gain… remember, it is speculative.

Okay, here we go again.. small stock, use limit orders, nothing else is happening with this company other than I am talking about it… so if it jumps, that is wrong… do not move the stock with your buying… you have the weekend to do the homework… it is why I try to say speculation Friday… so you can’t just dive in tonight and buy after hours… or the next morning… you have to think about it… think about it all weekend… it is a Taft-Hartley like cooling off period.

Here is the bottom line…

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Bottom Line:     For a mobile internet play on texting and switching numbers that has got a ton of international exposure… that has not moved… unlike all of the other stocks in the index that I put together… take a look at the forgotten tech spec… take a look at Tekelec (TKLC)… TKLC.

 

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