Product category:
Optical Transceivers, Transponders and Repeaters
News Release from: Bookham
Edited by the Electronicstalk Editorial
Team on 04 February 2005
Dollar decline hits Bookham bottom line
Bookham has reported results for its second quarter of fiscal year 2005, ended 1st January 2005.
Bookham has reported results for its second quarter of fiscal year 2005, ended 1st January 2005 Net revenues for the second quarter were $45.8 million, an increase of 5.0%, compared with net revenues of $43.6 million for the quarter ended 2nd October 2004
This article was originally published on Electronicstalk on 28 Feb 2008 at 8.00am (UK)
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Net revenues for the second quarter increased by $5.2 million from $40.6 million in the comparable quarter ended 31st December 2003.
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Revenues from customers other than Nortel increased 9% sequentially.
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Gross margin in the second quarter was negative 8%, compared with negative 5% in the preceding quarter.
The quarter to quarter decline in gross margin was primarily a result of the deterioration in the value of the US dollar compared with most other currencies in which Bookham's costs are incurred, and principally UK pounds.
Operating expenses increased by $0.2 million, or 1%, from $36.9 million to $37.1 million in the second quarter on a GAAP basis due mainly to the inclusion of certain nonrecurring items.
On a non-GAAP basis operating expenses, excluding one-time items, declined 4% between the first and second quarters from $30.2 million to $29.0 million, despite the deterioration in exchange rates.
Non-GAAP figures exclude certain non-recurring items which in the quarter ended 1st January 2005 amounted to $8.1 million (comprising restructuring charges of $7.9 million and costs to change the company's domicile of $0.2 million) and in the quarter ended 2nd October 2004 amounted to $6.7 million (comprising restructuring charges of $4.3 million and costs to change the company's domicile of $2.4 million).
The company reported a net loss of $41.1 million, or $1.23 per share, for the quarter ended 1st January 2005, as compared with a net loss of $38.3 million, or $1.16 per share, for the quarter ended 2nd October 2004, and a net loss of $10.6 million, or $0.49 per share, for the quarter ended 31st December 2003.
On a non-GAAP basis, the company reported a net loss of $33.0 million ($0.99 per share), excluding restructuring and redomicile charges referenced above for the quarter ended 1st January 2005, compared with a net loss of $32.7 million ($0.99 per share), excluding restructuring and redomicile charges partially offset by a credit relating to a pension provision referenced above, for the quarter ended 2nd October 2004.
The move of the company's product assembly and test operations from its UK assembly site to its Shenzhen, China assembly site are proceeding on plan and is a major part of the company's cost-reduction plan.
The majority of the passive products have now been moved to China, as have some of the first optical amplifier products.
The first active product has also been transferred and qualified, ahead of the original plan.
$4.1 million in revenues were shipped from the company's China plant in the quarter, compared with $1.6 million in the previous quarter.
The company held $77.8 million in cash, cash equivalents, short term investments and restricted cash at 1st January 2005 compared with $83.4 million at 2nd October 2004.
This includes the net proceeds of $24.2 million after costs of $1.3 million from the convertible debenture offering which the company closed on December 22, 2004.
The company used $4.1 million of the proceeds from the debenture to repay principal on the $30.0 million loan note with Nortel Networks.
On a non-GAAP basis operating cash burn increased by $0.4 million sequentially to $24.7 million for the quarter ended 1st January 2005.
The company would have had a cash burn improvement had it not experienced the negative impact of exchange rate deterioration.
The company defines operating cash burn as EBITDA excluding restructuring and other one-time charges, which has been calculated as an operating loss of $32.6 million (before restructuring and other one-time charges) less depreciation and amortisation charges of $7.9 million in the quarter ended 1st January 2005.
Giorgio Anania, Chief Executive Officer of Bookham, commented: "This quarter has been characterised by three main events".
"On the top line we have demonstrated further progress in revenue growth, and we see increased demand for future shipments".
"On the cost side we have seen very good progress with our move of assembly operations to China as well as with all other cost-reduction measures we have launched".
"Notwithstanding the degradation of the dollar-to-pound exchange rate, which has negated the effect of these improvements short-term, we expect that our cost reduction measures will start to have a significant impact in the near future".
"Finally, the closure of our debenture offering strengthens our near-term financial position, an important part of our strategy as we work our way through our restructuring".
The company is currently experiencing strong demand for its products, and on certain production lines is increasing capacity to be able to address this higher demand.
Increases in capacity are in part limited by the fact that the company is currently running duplicate lines as it transfers product assembly to China.
The company expects revenue for the third quarter ending 2nd April 2005, to be in the range of $46.0 million to $48.0 million, with a further increase expected in the June 2005 quarter of 5 to 10%.
The company expects that the move of its assembly operations to China, as well as its other cost reduction measures, will result in improvements in its gross margin and cash burn in the June 2005 quarter with further improvements expected in the September and December quarters.
In the March quarter, the cost of running duplicate lines and requalifying products is expected to offset improvements from restructuring and other cost reduction and result in only small improvements in the company's gross margin.
Gross margin is expected to improve moderately in the third quarter by 2-3 points, but is expected to improve by 5-10 points in the subsequent quarter.
This is subject to continued on-plan progress with the move of assembly operations to China, no further degradation in the dollar/pound exchange rate and the continued ability of the company to maintain requisite financial resources.
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