Bookham Readies More Cuts
Bookham shares were down 26 cents (8.9%) to $2.65 in after-hours trading Thursday.
Glum earnings, sometimes infused with layoffs, have become almost routine for Bookham, as its previous three earnings reports were all downcast. (See Bookham Trims Again, Bookham Slips Again, and Bookham Bruised by Q1.)
But the newest cuts, aimed at saving $6 million to $7 million per quarter, are being made with the goal of reaching breakeven this year.
"We are being very, very clear internally that we are driving the entire company to achieve the adjusted EBIDTA [earnings before interest, depreciation, taxes, and amortization] breakeven before the end of the September 2007 quarter," CEO Georgio Anania told analysts on a conference call.
It's unclear how many of Bookham's 2,100 employees will be affected by the latest cuts.
"I'm legally unable to tell you," Anania said when asked on the call. That's because Bookham has only started its legal consultation with employee representatives in the U.K., he said.
What's triggering the latest cuts is an unexpected drop in revenues from Nortel Networks Ltd. , Bookham's largest customer. It seems inventories at Nortel built up unexpectedly, causing a temporary lull in orders from the company, Anania said, emphasizing "temporary." He expects Nortel to return to normal buying patterns after March.
Bookham now expects revenues in the March quarter to be between $44 million and $48 million. Analysts were looking for $56.2 million, according to Reuters Research .
It appears the latest round of cuts will include layoffs at Bookham's semiconductor fab in Caswell, U.K. "We need to make sure we can run it more affordably," Anania said.
Other cuts will come from the continued migration of non-semiconductor manufacturing to Shenzhen, China -- a process begun in 2004. With the Shenzhen site now fully operational, Anania said the company is comfortable with moving even more functions over there.
When will it all end? Soon, Anania thinks. Yesterday's press release quotes him saying: "I believe this will be the low point in calendar 2007 and that revenue will rebound over the remainder of the year."
For its second quarter, ended December 30, Bookham reported losses of $21.3 million, or 31 cents per share, on revenues of $56.3 million. In its first fiscal quarter, which closed at the end of September 2006, the company lost $22.9 million, or 38 cents per share, on revenues of $56.4 million.
For its second quarter a year ago, Bookham reported losses of $11.9 million, or 19 cents per share, on revenues of $60.7 million.
Pro forma net losses of 26 cents per share in the second quarter were worse than the analysts' estimate of 16 cents, according to Reuters.
— Craig Matsumoto, West Coast Editor, Light Reading