News Article

Bookham's Tunable Lasers Hit Capacity Barrier

Troubles with the laser maker's flagship line mean it faces an unappealing quarter of flat overall sales and further cost cutting.

Capacity constraints are putting the brakes on the rapid expansion of Bookham's tunable laser manufacturing and delaying its progress to profitability.

In the first three months of 2008 tunable products accounted for 16 percent of the company s $59.7 million revenues, jumping from only 2 percent of total revenues in Q1 2007. Although Bookham s 3-inch InP fab in Caswell, UK, is coping well, it seems back-end processing will hold the product line back from continuing its exponential growth.

“Tunable is turning into one of our chief product lines, now and for our future," emphasized Alain Couder, Bookham's CEO. “In the June quarter we expect a slowdown in the revenue growth, but we are doing everything we can to meet our customers growing demand."

This restriction means that Bookham is predicting a third consecutive quarter of total sales in the region of $60 million, a figure which delivered losses of over $5 million in this period and last.

Bookham will use this flat quarter to cut costs by completing the move of photonics tools and solutions manufacturing currently done in San Jose, California, to Shenzhen, China. The company is also in the process of moving 40 percent of its total raw material supply to Asian sources, although benefits from this to date have been offset by currency fluctuations.

Even though they represent Bookham's key hope for the future, tunable products' profit margins are lower than the company average. Thanks to its ongoing cost-cutting efforts, Bookham estimates that a return to unconstrained growth in tunables will coincide with much improved profitability for this line and the company overall.

“We believe that continued revenue growth and margin improvement will result in a transition to positive cash flow before the end of the calendar year," Couder said.

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