Bookham makes its first profit

28 Oct 2008

Despite all the doom and gloom in the financial markets, Bookham reported its best-ever quarterly earnings.

Optical components vendor Bookham reported positive adjusted EBITDA (earnings before interest, taxes, depreciation and amortization – a measure of profitability) for the first time since it went public in 2000.

Revenue for the first quarter of fiscal 2009, which ended on 28 September, was $66.5 million, an increase of 6% compared with the fourth quarter of fiscal 2008, and up 23% compared with the year-ago quarter.

Net income in the first quarter was $2.2 million, or $0.02 per share, compared with a net loss of $1.9 million last quarter, and a net loss of $11.0 million in the first quarter of fiscal 2008.

Bookham couldn't have got into the black without the improvement in gross margin of its telecoms division, which was up 10 percentage points in the last six months, hitting 26% – the best performance of all of the company's divisions.

Chief executive Alain Couder reminded investors that the company's performance confirms what he said a year ago: that higher volume in the Shenzhen, China, facility would deliver improved gross margins, and that the company would start generating a positive income if it reached more than $65 million in revenues.

It's been a long road to profitability for the chip maker, which started out in 1988 as a developer of silicon optical subsystems, before becoming one of the most proactive consolidators of the industry during the early 2000s.

Unfortunately, thanks to the economy the good times might not carry over to the next quarter, which ends in December. Bookham is forecasting revenues in the range of $57 million to $62 million, which leads to an adjusted EBITDA close to break-even, between negative $2 million and positive $2 million.

However, Couder pointed out that Bookham has no debt, and the company is prepared for a slowdown. It already took action last quarter to cap expenses across the board, lower its break-even point and preserve cash.

"The financial markets will make the downturn a lot deeper, but we were already in a slowdown," Couder told analysts. "The financial crisis is on everyone's mind today, but even before that we saw the semiconductor equipment market slowdown in the spring, followed by the telecoms test and measurement market in the early summer."

The vendor expects an inventory build-up at three of its North American customers, which probably includes Nortel, an 18% customer in the quarter. However, the build-up will be short lived, the company says, lasting no more than one quarter for two of the customers, and two quarters for the third customer.