Bookham shares plunge as Nortel deal ends
The reason for the warning was an anticipated reduction in revenue from Nortel Networks, Bookham’s largest customer. As part of the acquisition of Nortel’s optical components business in November 2002, Bookham and Nortel entered into a three-year supply agreement. Part of the agreement was a commitment by Nortel to purchase a minimum amount of $20 million of product from Bookham on a quarterly basis for six quarters. This minimum purchase commitment expired at the end of the first quarter of 2004.
Bookham’s revenue in the first quarter of 2004 was $41.3 million, up 2% from the previous quarter and up 25% from the first quarter of 2003. Revenue for the second quarter of 2004 is expected to be in the $36 million to $40 million range. The US dollar is the principal currency in which the company receives orders.
In sterling, Bookham’s revenue was 22.5 million pounds, down 6% compared with the previous quarter but up 7% compared with the first quarter of 2003. The average US dollar to sterling exchange rate declined 9% from the fourth quarter of 2003.
Bookham’s net loss for the first quarter of 2004 under UK generally accepted accounting principles (GAAP) was 16.0 million pounds ($29.4 million), compared with a loss of 9.0 million pounds in the last quarter of 2003.
Bookham’s total cash burn for the first quarter of 2004, excluding the acquisition of New Focus, was 11.1 million pounds ($20.4 million). The company anticipates cash burn to be between 12 million and 15 million pounds in the second quarter of 2004, principally due to lower revenue and the impact of foreign exchange.
Commenting on the results, Giorgio Anania, Chief Executive Officer, said: “The major event this quarter was the completion of our acquisition of New Focus, which brings us additional revenues and new customers, a significant strengthening of our cash position and a cost-reduction route through the large assembly facility in Shenzhen, China.”
The factory in Shenzhen was obtained through Bookham s acquisition of New Focus and the company has commenced recruitment with a goal to rapidly staff this facility. The initial products to be transferred to the Shenzhen facility have been identified and include transmitter and receiver optical assemblies, along with mini amplifiers. The Shenzhen facility is currently being prepared to receive the first transfers of equipment from the Paignton, UK, facility where these products are currently manufactured.
“Growth in revenues to customers other than Nortel has continued, as in previous quarters, increasing 5% sequentially,” continued Anania. Nortel represented 58% of Bookham’s revenue in the fourth quarter of 2003 and 48% in the first quarter of 2004. Marconi accounted for 12% of Bookham’s first-quarter 2004 business.
“We have started to see traction with the thin-film passive products and subsystems, through our acquisitions of Cierra Photonics and Ignis Optics in 2003,” said Anania. “In addition we have commenced the first pre-production shipments of our high-power lasers into industrial markets.”
Bookham also said that it may transfer its corporate domicile and primary stock exchange listing to the United States, subject to shareholder approval, due to a substantial transformation in the company s business activities, customer base and shareholder ownership since its IPO four years ago.