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Optical components

Bookham Bruised by Q1

With Avanex Corp. (Nasdaq: AVNX) and JDSU (Nasdaq: JDSU; Toronto: JDU) announcing well received earnings last week, fellow optical components vendor Bookham Inc. (Nasdaq: BKHM; London: BHM) might have been poised for good news as well.

But no! With a swing and a miss yesterday, Bookham missed analysts' first-quarter targets and announced a lower-than-expected forecast for the second quarter.

That could make for a brutal trading day today. Bookham shares fell 45 cents (12.4%) to $3.18 in after-hours trading last night. By contrast, Avanex and JDSU enjoyed gains of more than 10 percent after their earnings calls last week. (See Infinera Boosts Avanex and JDSU Lands in the Black.)

For its first quarter, which ended Sept. 30, Bookham reported losses of $22.9 million, or 38 cents per share, on revenues of $56.4 million -- compared with losses of $27 million, or 47 cents per share, on revenues of $55 million the previous quarter. (See Bookham Reports Q1.)

For its first quarter a year ago, Bookham reported losses of $500,000, 2 cents per share, on revenues of $62.6 million.

The numbers weren't far from analysts' expectations. Pro forma net loss of 26 cents per share met the estimate tallied by Reuters Research but was 1 cent short of the 25 cents per share reported by Thomson First Call .

Where Bookham really fell short was in its second-quarter forecast, for revenues of $56 million to $59 million. Analysts were looking for $60.5 million, according to Reuters.

Bookham's non-Nortel business -- about 74 percent of revenues last quarter -- is partly to blame. "In the December quarter, we could see a pause in the growth rate of non-Nortel customers," with growth kicking back in with the March quarter, Anania said.

The pause is based in part on some lowered forecasts from certain OEMs, Anania said. But it's also the law of averages. "If you get 62 percent revenue growth over three quarters, it's normal to expect somewhat of a breather," Anania said, referring to the recent growth in non-Nortel sales.

Cisco Systems Inc. (Nasdaq: CSCO) accounted for 13 percent of first-quarter revenues, due mostly to a design win for a Bookham amplifier, Anania said.

That's a bit of a comeback in the Bookham-Cisco relationship. Bookham had previously sold into a different Cisco win. One analyst suggested this was the ONS 15454 optical system, which Anania didn't quite confirm. ("You're very well informed," he told the analyst.) But those revenues dropped away. It might be just coincidence, but that seems to jibe with the ongoing theory that Cisco is lowering its emphasis on optical platforms, including the 15454. (See Optical: Cisco's Odd Man Out?.)

Like Avanex, Bookham is counting on some new products to cultivate some revenue growth and shore up margins. New products Bookham began to ramp up during its first quarter include an amplifier subsystem, an optical amplifier, an electro-absorption modulated laser, a new transmitter module, and the company's first tunable laser, Anania said.

— Craig Matsumoto, Senior Editor, Light Reading

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deauxfaux 12/5/2012 | 3:35:37 AM
re: Bookham Bruised by Q1 "Adding it all up, would you folks say the company's made some progress toward stability"

Naaaaaah. The NT business continues to move toward more "arms length" purchases over time, providing NT with more strength to push prices down. This is especially true with MSA parts.

1) They still can't move the needle on OpEx

2) They stated that they have a "$60-65M breakeven revenue run rate" in the call. This implies that they have 200% flow through in the P&L (-$21M in OpEx and $56M in sales means that they would have to generate $21M in cash from $9M in incremental sales.....huh?).

More BS
Pete Baldwin 12/5/2012 | 3:35:37 AM
re: Bookham Bruised by Q1 ... cash burn was cut down, and cash was up overall (due to a $29M infusion during the quarter)...

Bookham was optimistic on the call, as usual. But Bookham's losses still look scary. Adding it all up, would you folks say the company's made some progress toward stability?

Guess it's a moot question for the moment, since next quarter is projected flat ...
alcabash 12/5/2012 | 3:35:36 AM
re: Bookham Bruised by Q1 who would believe Giorgio anyway, his NT business is dying, Cisco is getting out of optical... time to run for the hills.
What a shame ... such a weak management team ...what is the board doing?
Bookedout 12/5/2012 | 3:35:36 AM
re: Bookham Bruised by Q1 Inventory is evil, especially if it almost matches your cash ..... $51.6m is a lot of evil, even if it is stable.
waverunner 12/5/2012 | 3:35:33 AM
re: Bookham Bruised by Q1 "If you get 62 percent revenue growth over three quarters, it's normal to expect somewhat of a breather,"

Did he screw up his face when he made this statement. Bold, from an organization who has yet to show a profit in what...the last 32 qtrs!

Also NT Optical numbers are up 20%; BKHM NT numbers going south, NT sees all risk from BKHM, got to go visit the customer once in a while, Giorgio.

W

DZED 12/5/2012 | 3:35:31 AM
re: Bookham Bruised by Q1 There seems little point in believing anything Anania has to say.

Every quarter for the last seven years its been:

"Don't worry, in two quarters everything will be dandy". But with real doubts Bookham is a going concern this doesn't really wash. In two quarters it may well be dandy for Anania as he collect his next round of bonuses and free stock.

"Our failure to meet our predictions is due to 'unexpected events'" Not exec graft, short-termism and incompetence then?

With Bookham flat in a rising market, production entirely transferred to China and no prospect of gross margin increases above 17% there seems no future.
deauxfaux 12/5/2012 | 3:35:29 AM
re: Bookham Bruised by Q1 Sounds like you are either a BKHM investor that got blind sided and beat up or the titular head of the excuses department at BKHM.

The analysts call it a miss, so it is a miss
spiritofgravity 12/5/2012 | 3:35:29 AM
re: Bookham Bruised by Q1 There was no miss here, based on last quarter management guidance.

Sales guidance 55-58 million
Actual 56.7 million (HIT midrange)

GM guidance 10-15%
Actual 17% (EXCEEDED)

Adj. Ebitda guidance -8 to -10 million
Actual -7.7 million (EXCEEDED)

Looking ahead, non-Nortel sales flat in calendar Q4 2006 since second largest customer Cisco traditionally drops order volume at year end.

Nortel sales drop expected in calendar Q1 2007 due to expiry of supply agreement. Should stabilise thereafter.

Expect flat to lower sales in Q1 2007, as growth in non-Nortel balanced by drop in Nortel. Return to double digit growth in Q2. Adj Ebitda breakeven Q3 or Q4 2007.

spirit
Pete Baldwin 12/5/2012 | 3:35:27 AM
re: Bookham Bruised by Q1 yeah - miss or no miss, investors definitely gave Bookham a thumbs-down for Q1. (To be fair, the stock is recovering a little, up 5% so far today.)

I know stock prices and valuations are all relative, but .... I do find it interesting that Bookham was treated so much worse than Avanex this time around. Especially since Anania was so optimistic on the call. (joke alert)

Granted, Bookham climbed after Avanex and JDSU's earnings on Thursday -- maybe those gains were simply being erased.
deauxfaux 12/5/2012 | 3:35:21 AM
re: Bookham Bruised by Q1 The solution: Don't read my posts!!!! Put me on Ignore....please!!!

You wrote "but like a lot of people I want to know why it proceeds like this"

Read...

1) They still can't move the needle on OpEx

2) They stated that they have a "$60-65M breakeven revenue run rate" in the call. This implies that they have 200% flow through in the P&L (-$21M in OpEx and $56M in sales means that they would have to generate $21M in cash from $9M in incremental sales.....huh?).

You said "unless you have something construction to say"

You can say all of the construction things that you want, but there is nothing contrucTIVE to say about the destruction of $1,000,000,000.

You said "df has constantly belated BKHM"

DF doesn't know how to "belate" BKHM, nor does he know how to berate an inanimate legal entity. If you find out how, please post the answer.

"Only two things are infinite, the universe and human stupidity, and I'm not sure about the former."....Albert Einstein

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