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Bookham plus Avanex equals Oclaro

28 Apr 2009

After a protracted gestation period, Bookham and Avanex have officially merged into Oclaro, creating one of the largest suppliers of fibre-optic components and subsystems in the optical communications industry.

The amalgamation, formally announced in January and now made official with unveiling of the new brand identity, also sees a renewed intention to build market share in non-telecoms applications through the creation of an Advanced Photonic Solutions division.

"The goal is to use our optical innovations to create a new growth engine for the company," division head Yves LeMaitre told optics.org. "The time is right for us to be more ambitious, and adopt a more aggressive strategy to tackle other photonics markets."

Bookham's interests outside telecoms have to date included high-power laser diodes for materials processing applications, and VCSELs targeted at consumer markets. The 2003 acquisition of New Focus also gave the company entry into scientific R&D markets. LeMaitre intends to grow all these sectors.

"Today these products account for perhaps 15% of our business in terms of volume," he said. "That's enough to now drive some substantial investment from both an R&D and a sales perspective. My goal is to double that business over the next few years. The merger gives us a good foundation to build a business that can achieve profitability in a relatively short timeframe and generate additional growth."

LeMaitre believes that the photonics markets targeted by Oclaro are today showing similar dynamics to the telecoms markets of a few years ago: "Some vertically integrated customers are realizing that they do not need to design and develop their own laser diodes, but can buy them commercially on the merchant market. This gives companies like ours every reason to continue to invest in those technologies. There is strong market interest in locating suppliers of high-power diodes, so we are looking at a sizeable business opportunity."

Both Bookham and Avanex have been through turbulent times in their markets, but have now achieved enough stability for the merger to make sense even during a recession, according to LeMaitre: "There have been a few difficult years, where both companies have had to deal with a low cash position and digest a number of major acquisitions. But we feel that Bookham and Avanex together have a strong ability to adjust, and our manufacturing structure gives us a flexibility which we can use to our advantage as we enter the photonics market."

The Oclaro brand will cover all areas of the combined companies' operations. The exception is New Focus, which will keep its own identity. "New Focus has reached a level of brand recognition and maturity, especially in scientific R&D markets, which we feel is associated with high performance and high-quality products, and we want to continue that," commented LeMaitre.

• Oclaro also announced Bookham's financial results for the third quarter of fiscal 2009. Economic conditions impacted revenues, which dipped to $47m (€34.5m) from $50.2m in the previous quarter and $59.7m in Q3 2008. As a result the company's net loss worsened to $13.3m, compared with a net loss of $6.5m in the second quarter of fiscal 2009 and a net loss of $5.4m in the third quarter of 2008.

"Despite the lower third quarter revenues that were driven by the economic downturn, we held our adjusted EBITDA close to break even," said Alain Couder, president and chief executive officer of Oclaro. "Moving forward, we expect the merger with Avanex Corporation to further accelerate our progress towards profitability."

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