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Bookham, Avanex Form Oclaro

Craig Matsumoto
4/27/2009

It's official: Bookham Inc. (Nasdaq: BKHM; London: BHM) and Avanex Corp. (Nasdaq: AVNX) have combined, and the new company is called (drum roll) Oclaro.

Oclaro was born today after shareholders from both sides agreed on the merger. Oclaro is getting its first public showing as Bookham announces third-quarter earnings today.

Light Reading did not have a copy of the Oclaro logo at press time, but we're told it's a nice shade of night-sky blue.

A new name and new look were vital because the companies wanted to paint this merger as a fresh start. "Both companies, as you know, have long histories, and good periods and not-so-good periods," Yves LeMaitre, Oclaro's vice president of sales and marketing, tells Light Reading.

That's one way to put it. In 2005, Avanex and Bookham reached a low point of nearly running out of cash, pulling out all the financial stops to stay afloat. (See Bookham, Avanex Shore Up.)

Bookham and Avanex don't overlap much in products, meaning the deal won't address the oversupply that's weighted down optical components. (See Optical Components: Still Too Crowded and Bookham, Avanex Defend Their Deal.)

But the companies say the merger gives them the leverage to compete against JDSU (Nasdaq: JDSU; Toronto: JDU), and against the beefed-up Finisar Corp. (Nasdaq: FNSR) and Opnext Inc. (Nasdaq: OPXT). (See Finisar & Optium Challenge JDSU, Opnext Steps Up With StrataLight, and Opnext Changes CEOs, Starts Cutting.)

"If the people side is well dealt with, which is typically the No. 1 reason why mergers don't succeed, it really gives us a different position in the marketplace," LeMaitre says.

Many details of the merger are already known, including the companies' estimate that they'll eventually cut costs by $28 million per year by merging. Bookham's executive team will be running Oclaro; most of the Avanex executive team has already signed resignation agreements. (See The Bookham Team.)

Layoffs are probably the biggest question on employees' minds. A few cuts are inevitable, but Bookham officials say a mass layoff isn't in the works.

"This is not going to be one of those bloodbath mergers," LeMaitre says. "Both of the companies have gone through a fair amount of their restructuring already, so it's not a merger where you have to cut 50 percent of your staff and some product lines because they overlap."

Oclaro also won't be shutting down any R&D or manufacturing sites, officials note. The company will continue using Fabrinet Co. Ltd. (NYSE:FN) as a contract manufacturer, as Avanex did, but it will also keep operating Bookham's manufacturing facilities.

That might sound like a complex juggling act, but Bookham had intended to start using contract manufacturers anyway. "In a sense, the hybrid model was already part of Bookham. When we fill up Shenzhen, the plans were not to build a parallel Shenzhen," says Jerry Turin, the Bookham CFO who's doing the same job with Oclaro.

Avanex saw a drop in its cash during the December quarter, to $37.1 million from $49.6 million in the previous quarter, but officials insist that's not a sign of trouble to come.

"With the combined cash reserves of both companies, you've got a strong balance sheet. You've got no debt from either company, and Bookham brings a line of credit to the table," Turin says.

— Craig Matsumoto, West Coast Editor, Light Reading

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deauxfaux
deauxfaux
12/5/2012 | 4:06:03 PM
re: Bookham, Avanex Form Oclaro
Can two drunks leaning in opposite directions prop each other up? Can the cash burn of 1+1=1/2? Enquiring minds want to know.
bollocks187
bollocks187
12/5/2012 | 4:06:02 PM
re: Bookham, Avanex Form Oclaro
All of them.
HomerJ
HomerJ
12/5/2012 | 4:06:00 PM
re: Bookham, Avanex Form Oclaro


 


New name! Same turd-like taste!

Vent
Vent
12/5/2012 | 4:06:00 PM
re: Bookham, Avanex Form Oclaro


There is some overlap between Bookham and avanex and not only in management


Amplifier design


Tranceiver module design


for example


not large numbers but some aggustments to be made

deauxfaux
deauxfaux
12/5/2012 | 4:05:59 PM
re: Bookham, Avanex Form Oclaro

The scholars at the DeauxFaux Institute (DFI) have been studying Bookham/Avanex and its new moniker: Oclaro. Through painstaking research, the team at DFI has identified alternative meanings of the word that bear scrutiny, and are preparing a scholarly paper on these uses for submission to “The Onion.”

Medicine (fatal brain tumor):  “The MRI shows that a massive Hyperneuropathic Oclaro is pressing against the brain stem, and patient only has 6 weeks to live.”

Criminal Law (an unnatural act committed with your own hands in public): “Ladies and Gentlemen of the Jury, we shall clearly prove that the defendant(s) committed the heinous crime of Manus Oclaro in the capital markets….”

Religion (unholy alliance): “And the lord thy god spoke thus unto the masses: reject the Oclaro of Satan and the Beast…for nothing good can become of it.”

Finance (Negative Cash Flow): “While our GAAP cash flow shows a huge Oclaro, we believe that Non-GAAP is a better way of hiding…..er…putting this into perspective.”

Literature (Tragedy): “The classic Greek Tragedy features human suffering for the pleasure of the audience, while the Oclaro plays on the human suffering of employees and investors for the pleasure of management”

Vent
Vent
12/5/2012 | 4:05:54 PM
re: Bookham, Avanex Form Oclaro
The ex Bookham amplifier group to be cut
steady
steady
12/5/2012 | 4:05:54 PM
re: Bookham, Avanex Form Oclaro
I am very sad with the amplifier business. From the tech point of view, this business just stays where it was long ago. The point is amplifier doesn't affect rate speed or modulation format. As far as I know, the notable progress on amplifier in fact isn't in the communication industry.
Vent
Vent
12/5/2012 | 4:05:49 PM
re: Bookham, Avanex Form Oclaro


Ex Avanex Transponder development to be cut

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