News Article

Tunable Bounce Helps Bookham Think Positive

With orders from key customer Nortel returning, sales of tunable lasers growing fast, and cost-cuts having the desired effect, Bookham is looking to the future with increased optimism.

InP optoelectronics firm Bookham posted sales of $45.1 million for the quarter that ended on June 30, up marginally from the previous quarter.

But despite the flat revenue picture, the San Jose firm s bottom line is starting to look healthier, following major cost-cutting over recent months.

According to standard accounting principles, the chip manufacturer made a net loss of $13.6 million in the quarter, down from $24.3 million in the previous three-month period.

While the loss is still undeniably hefty, the combination of shrinking costs and an anticipated future increase in sales should help the company move towards financial break even.

Restructuring measures that included staff cuts at its compound semiconductor facility in Caswell, UK, cost Bookham $6.1 million in the June quarter, as the company used up $19 million of its cash reserves.

CEO Peter Bordui estimates that Bookham is now 70 percent through its restructuring, with further costs to come in the next two quarters.

However, there has already been an impact on its financial results, with gross margins recovering well. Combined with sales to number-one customer Nortel more than doubling over the previous quarter, and sales of tunable lasers jumping 60 percent, the company's management is sounding hopeful for the future.

Declining orders for amplifiers from networking giant Cisco Systems put a drag on sales, but Bookham said that adoption of 10 Gb/s components for both metropolitan and long-haul networks bounced back during the latest quarter.

Now with no fewer than six "top tier" customers buying its tunable laser products, Bookham sees this relatively new technology as one of its key growth drivers. It is also set to release a new, more compact version of the component in the second half of 2007.

With shipments of 980 nm pump lasers made at its Zurich facility now up and running, Bookham is predicting further improvement in manufacturing margins for the September quarter, as well as a hike in sales to between $50 million and $54 million.

If the company can continue improving at that rate and ensure that its cash position does not become a problem, incoming CEO Alain Couder - who begins his term next week - may take over the reins at just the right time.

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