Bookham Basks in 'Cramer Effect'

Loud approval from TV pundit Jim Cramer sends Bookham stock skyrocketing but the Q3 forecast sends it back down

Craig Matsumoto, Editor-in-Chief, Light Reading

February 2, 2006

2 Min Read
Bookham Basks in 'Cramer Effect'

Bookham Inc. (Nasdaq: BKHM; London: BHM) released earnings today, but who cares? The company's U.S. shares were up 22 percent hours before the numbers were released.

Oh, but wait -- earnings results do count. Bookham's second-quarter net income missed analyst estimates slightly, and its third-quarter forecast was unexpectedly glum.

The result? Shares climbed as high as $8.49 before settling down, closing up 84 cents (12%) at $7.80. In early after-hours trading, the stock was back down 55 cents (7.1%) to $7.25.

For the run-up, Bookham apparently owes thanks to Jim Cramer, whose Mad Money TV show -- essentially one continual rant packed with a catch-phrase density rivaling ESPN's Sportscenter -- has become a favorite among day traders, investors, and New York media types.

Cramer has been a fan of JDSU (Nasdaq: JDSU; Toronto: JDU) for some time, and yesterday, he showered his favor on Bookham, saying the stock was undervalued. Some of his enthusiasm came from Bookham's recent deck-clearing moves to erase long-term debt, which irritated investors in the short term but supposedly strengthened the balance sheet for the long run. (See Bookham's Gain Causes Pain.)

It's become routine for a stock to rise after getting a Cramer recommendation. Given that Bookham trades few shares each day -- about 600,000, compared with 3.6 million for Avanex Corp. (Nasdaq: AVNX) -- investors were able to send the stock skyrocketing.

For its second quarter, which ended Dec. 31, Bookham reported losses of $11.9 million, or 28 cents per share, on revenues of $60.7 million, compared with GAAP losses of $535,000, or 2 cents per share, on revenues of $62.6 million the previous quarter.

For its second quarter a year ago, Bookham reported losses of $41.1 million, or $1.23 per share, on revenues of $45.8 million.

Bookham's non-GAAP losses of $8.3 million, or 19 cents per share, were a penny worse than the consensus analyst forecast of 18 cents per share, according to Reuters. But Bookham's revenues were slightly better than the $59.5 million analysts had expected.

Where Bookham disappointed was in its third-quarter forecast, calling for revenues between $51 million and $54 million, missing the analysts' mark of $58.6 million.

On Bookham's conference call with analysts today, executives didn't explain the shortfall during their prepared comments. Bookham was expected to lose some revenues from Nortel, which is making last-time buys on certain older components as part of the companies' renegotiated contract. (See Bookham Soars on Nortel News.) But analysts already knew that and presumably included that decline in their forecasts.

The Nortel last-time orders should trickle down to nothing by the end of the June quarter, Bookham officials said.

— Craig Matsumoto, Senior Editor, Light Reading

About the Author(s)

Craig Matsumoto

Editor-in-Chief, Light Reading

Yes, THAT Craig Matsumoto – who used to be at Light Reading from 2002 until 2013 and then went away and did other stuff and now HE'S BACK! As Editor-in-Chief. Go Craig!!

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