SAN JOSE, Calif. -- Bookham, Inc., (Nasdaq: BKHM - News), a leading provider of optical components, modules and subsystems, today updated the financial guidance for its third quarter of fiscal 2006, ended April 1, 2006. The company now expects revenue will be approximately $53 million, within the guidance range of $51 million to $54 million the Company forecast on February 2, 2006.

Bookham also expects that its third quarter fiscal 2006 gross margin and Adjusted EBITDA will be lower than originally forecast. This is due in part to unanticipated costs for inventory obsolescence and production scrap associated with the transition of manufacturing from the Company's Paignton, UK facility, where production is being discontinued, to its low cost Shenzhen, China facility. In addition, the third quarter results were affected by a change in product mix towards lower margin products compared with the prior quarter as the Company transitions to new products, and related lower production volumes, which caused underutilization of the Company's semiconductor production capacity. As a result, third quarter gross margin is expected to be in the range of 10 percent to 12 percent and Adjusted EBITDA is expected to be in the range of negative $10 million to negative $12 million. This compares with the Company's original gross margin and Adjusted EBITDA guidance ranges of 23 percent to 27 percent, and positive $1 million to negative $3 million respectively.

"Our third quarter financial results were negatively impacted by unexpected costs related to the final production at the Paignton, UK site, a change in product mix, and lower semiconductor production volumes, which resulted in unfavorable manufacturing variances," said Dr. Giorgio Anania, president and CEO of Bookham Inc. "We are disappointed with the gross margin and Adjusted EBITDA results in the March quarter and now believe our gross margin results in the next few quarters may be impacted due to the change in product mix, lower fab utilization, and costs associated with introducing several new products, which will have lower initial margins. However, while these internal issues are a disappointment, we continue to see strong market demand and expansion of our revenue to non-Nortel customers."

Bookham Inc. (Nasdaq: BKHM; London: BHM)