Bookham misses out on profits once more

25 Jul 2008

Growth in the telecoms sector boosted revenues, but softness in non-telecoms markets is set to continue.

Bookham's progress towards profitability continued during Q4 2008, but without any positive cash flow actually materializing. The quarter's net loss of nearly $1.9 million was a strong improvement over the $13 million loss posted this time last year, and significantly better than the $5.4 million deficit of three months ago.

Alain Couder, president and CEO, described the results as a demonstration of the company's turnaround and growth momentum, but agreed that there was a clear distinction between the performance of Bookham's telecoms and non-telecoms businesses.

"We are seeing a difficult slowdown in the non-telecoms markets, especially in semiconductor equipment and high-power lasers," Couder told investors. "Sales in these markets increased by 18% compared with the equivalent quarter last year, but declined by 4% sequentially. We expect this softness to continue to the end of the calendar year."

Bookham's CFO Jerry Turin commented that this weakness had impacted on the company's overall results, even though telecoms now accounts for 76% of Bookham's total revenues. The company reported an increase of 39% in revenues year-on-year, reaching $62.6 million. "Softness in the non-telecoms markets offset improvements in our telecoms gross margins over the year," said Turin. "But overall we saw a substantial improvement in our financial results, including growth of $22 million from our tunable products."

That growth in tunable products is attributed by Couder to the company's indium phosphide chip technology. "This is rapidly becoming the preferred choice for tunable applications," he said. Telecoms now accounts for 76% of Bookham's total revenues.

The company has pledged to continue its twin initiatives of seeking greater operational efficiency and boosting its R&D. "Our cost saving initiatives are on schedule," said Turin. "The transfer of our photonics operations to Shenzhen, China, has fallen six to eight weeks behind schedule due to visa timing issues, but otherwise we are on track."

Bookham's R&D spending will be increased over the next quarters, according to Couder. "We have decided to increase our spending on capital equipment in the next two quarters, since it is innovation that drives profitability," he said. "We have to push our engineers to design products with new ideas that can lead to lower costs. It's the only way to improve our margin."