SAN JOSE, Calif., May 5, 2006 -- Bookham Inc. said the costs of moving its assembly and test operations from England to China and decreased production adversely impacted its third-quarter financial results, which will force it to cut costs by $5 million to $6 million.
Bookham, a San Jose-based maker of optical-networking parts, posted a loss Thursday of $48 million, or 90 cents per share, including a charge of $18.6 million for early debt retirement, restructuring charges of $2.4 million, and $7.2 million to settle a lawsuit. Revenue rose 7 percent to $53.4 million from $49.9 million last year, even though revenue from major customer Nortel Networks Inc. dropped 30 percent to $24.1 million. The optical networking stock dropped more than 13 percent late Thursday, according to reports.
Giorgio Anania, president and CEO of Bookham, said, "Our third quarter gross margin and adjusted EBITDA results were adversely impacted due to several factors, including unexpected costs related to closing our Paignton, UK, manufacturing facility, lower overall production volumes and a change in product mix. In response to the current situation, we are implementing a focused recovery plan, which will involve a number of companywide cost reduction measures designed to lower our overhead spending by $5 million to $6 million per quarter by the December quarter of this year."
Ananio said that despite these challanges, Bookham increased its revenue to telecommunications customers other than Nortel by 13 percent, and to industrial customers by 5 percent, over the second quarter; continued the move of its assembly and test operations to its manufacturing facility in Shenzhen, China; and started ramping up production on a number of new products that should enable it to broaden its market share and create additional sales opportunities this year.
"In the fourth quarter, we will conclude the sale of discontinued products to Nortel under the terms of our supply agreement," Anania said. "We are also winding down our Paignton assembly manufacturing operations and expect to complete this process over the next few months, which should result in additional cost savings, with the majority of the reductions being realized by the December quarter."
Bookham forecast fiscal fourth-quarter revenue between $52 million and $55 million.
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