Optical components

Bookham's Blues

2:15 PM -- On a day when most tech stocks are up, Bookham Inc. (Nasdaq: BKHM; London: BHM) was getting hammered: down about 10 percent in midday trading today.

It's rallying hard and is now down just 6 cents (2.8%) at $2.07. But it shows that investors didn't take well to yesterday's earnings call. (See Bookham Reports Q2.)

The company's second-quarter earnings, for the period ended Dec. 29, looked decent enough. Bookham met its $59 million revenue mark set earlier in the quarter. (See Bookham's Bounce.) And it's clawed back to a positive EBIDTA (earnings before interest, taxes, depreciation, and amortization) -- only $329,000, but positive for the first time since the end of 2005.

On the less cheerful front, Bookham expects short-term revenues to stall due to the weak economy, landing between $56 million and $60 million for its third quarter.

And that positive EBIDTA might not stick; Bookham is forecasting a range of negative $3 million to positive $1 million this quarter. Gross margins might actually worsen a bit, falling between 21 percent and 25 percent versus the second quarter's 22.8 percent.

Part of the problem is that Bookham expects to sell a higher proportion of new products -- which is actually good news, but those newer widgets generate a lower margin at first.

Chip vendor Cavium Inc. (Nasdaq: CAVM), on the other hand, is going gangbusters after its earnings call. The stock was up about 16 percent midday and has settled to a 10 percent gain, up $1.96 at $21.28. I haven't had time to survey Cavium's conference call -- maybe they promised everyone free ice cream. — Craig Matsumoto, West Coast Editor, Light Reading

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