Bookham to Cut Work Force
SAN JOSE, Calif., Feb. 2, 2007 -- Bookham Inc. said it will reduce its workforce, consolidate its UK semiconductor operation and shift more development activities to China in order to save $6 million to $7 million for the September quarter in an "aggressive" cost-reduction plan to attempt to break even this year.
The San Jose, Calif.-based optical components maker announced its quarterly results Thursday. It said it is taking these measures because of lower-than-expected revenues from Nortel Networks Ltd., its largest customer.
A Bookham spokesperson said the company is unable to comment on the number or locations of job cuts at this stage, except that the reductions will not all be in the UK, because it is required to undertake a consultation process with its employees first.
Giorgio Anania, president and CEO of Bookham, said, “By taking these additional actions, we believe our Adjusted EBITDA quarterly break-even level can be achieved at a quarterly revenue level of approximately $55 million to $57 million. For several quarters, we have discussed that our sales to Nortel would decline significantly in the March quarter, due mainly to the completion of the guaranteed purchase agreement at the end of December. Based on current forecasts, we believe revenue from Nortel will account for between 5 and 10 percent of our total March quarter revenue, compared with 26 percent in the second quarter, resulting from a higher-than-previously expected inventory buildup and the completion of the purchase agreement."
Anania said Bookham expects "modest sequential growth" in its non-Nortel revenue in the third quarter because of "normal seasonality" and reduced inventory for some customers. While non-Nortel revenue continues to grow, the anticipated increase will not make up for the expected decline in Nortel sales in the March quarter, he said.
“While we have lowered our March quarter revenue forecast, I believe this will be the low point in calendar 2007 and that revenue will rebound over the remainder of the year," Anania said. "We believe that the continued strong interest and design-in activity we are experiencing for our new products, and an expected rebound in Nortel revenue as the inventory situation is worked through, will drive revenue recovery over the next few quarters."
Bookham said it expects a third-quarter revenue of $44 million to $48 million, non-GAAP gross margin between 8 percent and 12 percent and an adjusted EBITDA of negative $12 million to negative $16 million.
Bookham's revenue in the second quarter of fiscal 2007 was $56.3 million, compared with $56.4 million in the first quarter of fiscal 2007 and $60.7 million in the second quarter of fiscal 2006. Revenue from customers other than Nortel was $41.8 million, unchanged from the prior quarter and approximately 58 percent higher than the second quarter of fiscal 2006. Revenue from Nortel in the second quarter was $14.5 million, essentially flat with the first quarter and down from $34.3 million, which included $13.8 million of last-time buy revenue, in the same quarter a year ago.
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