Bookham Ships More Jobs to China

Another 150 jobs are being transferred to China as the components firm continues its cost-cutting program

December 7, 2005

2 Min Read
Bookham Ships More Jobs to China

Bookham Inc. (Nasdaq: BKHM; London: BHM) is transferring more jobs to China from the U.K. as part of its ongoing cost-cutting strategy, it told its staff this morning.

In its latest cull of British staff, the optical components vendor is shifting 150 jobs related to its Chip on Carrier manufacturing process from Paignton, England, to its Shenzhen plant, which was opened last year. The move is part of Bookham's restructuring plan designed to reduce quarterly operating costs by up to $20 million. (See Bookham Adds to Layoffs.)

The news might cheer investors -- though obviously not the British staff -- as it will help stem some of the operating costs associated with running two parallel sites. "The company has so far made substantial progress in moving assembly and test operations to the Far East site and has seen positive cost reductions," says the vendor in an announcement emailed to Light Reading. (See Bookham Still Bleeding and Bookham, Avanex Shore Up.)

However, Bookham says it still needs to enter a 90-day consultation process with staff, starting today, and that the jobs transfer process will take about 9 months.

That's not the end of Bookham's operations in Paignton, though, as the company is retaining a research and development team of about 200 there. "The company expects this renewed focus on research and development and Bookham’s ongoing development of various global support teams to result in a more sustainable future for the site," says the company.

That sustainable future also involves finding new revenue sources, as the company is still heavily reliant on business from Nortel Networks Ltd. (NYSE/Toronto: NT). (See Bookham Soars on Nortel News.)

In its latest quarterly results, for the three months ended October 1, the company said it had increased revenues from "our non-Nortel business" as well as from its main customer. (See Bookham Posts Q1.)

But CEO Giorgio Anania also noted that Bookham expects that "revenue from Nortel will decline over the next three quarters as we reach the end of our last-time buys in the current agreement. However, we expect to expand business with our non-Nortel customers over the coming quarters and achieve additional improvements in our cost structure through the ongoing move to China."

New business announcements will therefore be eagerly awaited in the coming months.

Bookham's share price closed Tuesday at $4.74, giving the company a market valuation of $214 million.

— Ray Le Maistre, International News Editor, Light Reading

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