News

28 January 2009

 

Bookham improves cash balance despite 25% revenue drop

For its fiscal second-quarter 2009 (ended 27 December 2008), optical component, module and subsystem maker Bookham Inc of San Jose, CA, USA has reported revenue of $50.2m (down 15% on $59m a year ago and 25% on last quarter’s $66.5m).

However, this excluded deferred revenue of $5.4m including: (i) $4.1m for products shipped to major customer Nortel Networks, for which payment was not received prior to that firm’s bankruptcy filing on 14 January; and (ii) $1.3m for products shipped to a contract manufacturer for which payment may not be received as a result of the bankruptcy. Revenue would otherwise have been $55.6m (down just 5.8% on a year ago and 16% on last quarter).

Gross margin has shrunk from 25% last quarter to 17%, although this would have been 25% including deferred revenue. Excluding $0.3m of stock-based compensation and $0.4m of one-time charges from the transfer of photonics manufacturing operations from San Jose to Shenzhen, China (now substantially completed), non-GAAP gross margin was 19%, or 27% including deferred revenue (up slightly from 26% last quarter).

Compared to +$0.3m a year ago and +$2.2m last quarter, adjusted EBITDA was negative $3.6m. However, this would have been +$1.8m including deferred revenue.

Compared with net income of $2.2m last quarter, net loss was $6.5m. However, on a non-GAAP basis, Bookham still reported a net income of $3m, down slightly from $4.7m last quarter and an improvement on a net loss of $1.1m a year ago.

Despite the current challenging economic conditions, cash, cash equivalents, short-term investments and restricted cash rose by $1.5m to $44.7m.

During the quarter, Bookham cut expenses for R&D from $7.9m last quarter to $6.9m and for SG&A (selling, general and administrative) from $10.7m to $9.3m, as well as cutting restructuring and severance charges from $1.5m to $0.5m.

“We will continue to actively manage our cost structure while maintaining our focus on product innovation and improved operational performance,” says president & CEO Alain Couder.

For its fiscal third-quarter 2009 (ending 28 March), Bookham expects revenue of $43-50m, non-GAAP gross margin of 15-22% (excluding stock-based compensation), and adjusted EBITDA of negative $6.5-1.5m. Cash balance is expected to drop below $40m due to significant doubt over the collection of any of the deferred revenue in the March quarter.

The March quarter is expected to be the low point in revenues due to the economic downturn. However, visibility is not good, cautions chief financial officer Jerry Turin regarding the June quarter.

Bookham has also announced a proposed merger with optical communications component and module maker Avanex Corp of Fremont, CA, USA. “Upon completion, the new company will offer the largest product portfolio for the metro and long-haul markets,” says Couder. “We also expect the merger to result in improved financial performance quicker than if either company remained as a standalone entity,” he adds. “We believe this combination represents a compelling value proposition for our customers, our employees and investors who will see a more competitive company better able to succeed even in a difficult economy.”

See related items:

Bookham’s business with Nortel to continue on ordinary terms

Nortel files for bankruptcy protection during restructuring

Bookham reports its first profit following record revenue

Bookham losses narrow towards positive cash flow in December quarter

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