OK, gross margins in the second quarter were 7 percent, 2 percent better. At 2% per quarter, and needing to get to say 30% to have a net to report, that means at least 10 more quarters.
re: Avanex Trudges AlongAvanex and BKHM were twins seperated at birth. Neither was ever profitable, both used money obtained in the public markets to buy failing businesses (Alcatel's, Nortel's and Marconi's) because they never did anything useful as startups.
They do share a core competency: entropy production
re: Avanex Trudges AlongStill not a lot of love for these two, eh? :) At least they made it this far -- I talked to one investment type a year ago who didn't think both companies would make it to 2006.
Is there any recipe to keep both alive after this year, or do y'all think it's hopeless? Would the elimination of one help the other?
Not sure if the death of one would benefit the survivor, both companies challenges reside in execution. Put Chinese management and both companies will become profitable quickly. Mr Anania is a gifted salesman but when it comes to fixing a troubled optics company ....
re: Avanex Trudges Along"Mr Anania is a gifted salesman but when it comes to fixing a troubled optics company ...."
Come again?
Bookham is a troubled optics company BECAUSE Anania is running it. He 'fixed' it in the first place.
Anania has made the most disastrous series of decisions in terms of strategy, and every basic mistake in any management textbook in running the company he assembled.
Clearly if two companies are in direct competition it will be advantageous for one if the other fails.
re: Avanex Trudges AlongClearly if two companies are in direct competition it will be advantageous for one if the other fails.
Well sure, but my question is whether it will be advantageous *enough*.
There seems to be an optics oversupply for the moment, and the sudden disappearance of Avanex or Bookham would certainly help with pricing pressures et.al.
But if Avanex went away, would that be enough to nudge Bookham into stability, or vice versa?
Maybe the winners in optics will be the companies currently private, or even newer ones that can operate on a fabless model.
re: Avanex Trudges AlongLets say that AVNX went away
To simplify the discussion a bit, lets assume for a second that all of the SG&A is completely fungible between the two companies and that substantial functional exists. Obviously, any revenue increase through consolidation would help.R&D could certainly be consolidated to some degree over a period of a year or two.
If there is overlap between customers things get a little dicier. There is no way that a major customer that is buying from both suppliers is going to put all of the business into the hands of one manufacturer. If two companies to consolidate at a major customer, the customer will REDUCE their exposure to the combined entity.
Furthermore, if there is no overlap there is a strong probabilty that the parts are custom or at least a little different. This is the real problem. Without real operating leverage in the manufacturing area, you can't move the gross margin number at all, ensuring poor financial performance.
A merger between the two companies might be great for entertainment value, but that is about it.
re: Avanex Trudges AlongClearly if two companies are in direct competition it will be advantageous for one if the other fails.
ARE we all positive that revenue equal positve cash flow???? Come on now a first grader can tell you what happens if you put too much water is a broken sive...
Anania's inspired four pronged strategy, acquire - demoralise - decimate - close, does not seem likely to succeed however.