Oxfordshire, UK, August 4, 2003. Bookham Technology, a provider of optical components, modules and subsystems for fiber optic communication networks, has announced results for the second quarter and the six months ended June 29, 2003.
Highlights for the second quarter ended June 29, 2003
� Revenues in the second quarter 2003 were £21.0 million ($34.9 million), substantially equal to revenues in the first quarter 2003, in line with management expectations.
� Relationships with Nortel Networks and Marconi Communications remained strong, representing 62% and 10% of sales respectively and Huawei, the leading Chinese telecom equipment company, became a 10% customer for the first time in the quarter.
� Gross margin loss improved by 9% to (15%) in the second quarter 2003 from (24%) in the first quarter 2003. Operating expenses, excluding exceptionals, were reduced 14% quarter on quarter.
� Cash burn for the second quarter 2003 was £16.9 million ($28.1 million), down 5% on the first quarter 2003 (£17.7 million), reflecting significantly improved operating cash flow offset by higher spending relating to restructuring activities.
� Despite flat revenues, the net loss for the second quarter 2003, under UK GAAP, was reduced to £18.1 million ($30.1 million). This included exceptional charges of £1.8 million and compares with £25.0 million in the first quarter 2003, which included exceptional charges of £3.0 million. Under US GAAP, the net loss was £17.7 million ($29.4 million), which included acquisition related and restructuring charges of £1.8 million.
� The company announced further plans to reduce its overhead structure, which should reduce its cash breakeven point to between £30 and £35 million of revenue per quarter by the year end 2003.
Commenting on the results, Giorgio Anania, President and Chief Executive Officer, said: "We are advancing well with our cost reduction plans and are ahead of plan with our restructuring efforts. Losses have been reduced despite flat revenues during the quarter. While the market continues to be difficult we are taking additional restructuring actions to lower our breakeven point. The closure of our Ottawa fab scheduled for the third quarter is on track and coupled with other steps we are taking should lead to a major reduction in our overhead structure in the fourth quarter. On the sales side, we are progressing well with new customers, especially on subsystems and modules."
While revenues were flat compared to the first quarter, customer engagements were progressing well in the second quarter, especially in the subsystems and modules area. The company has also seen a shift towards the metro area, which accounted for approximately 45% of the revenues this quarter.
Relationships with Nortel Networks and Marconi Communications still remain strong, and in the second quarter 2003, they represented 62% and 10% of sales respectively. In addition, the company announced that Huawei, the leading Chinese telecom equipment company, accounted for 10% of revenues this quarter, for the first time.
Additionally, the company continues to develop applications of its non-telecom opportunities and believes it has strong growth prospects in this area, particularly in the industrial, military and aerospace areas and continues to support its MMICs (monolithic microwave integrated circuits) business. Assuming current progress continues, this non-telecom business could represent between 10% and 20% of total revenues in 2004.
Previously announced cost reduction plans are advancing ahead of schedule. The consolidation of the Ottawa fab into the Caswell, UK, facility should be completed in the third quarter of 2003 which will lead to significant overhead reductions in the fourth quarter 2003. Initial product qualifications of chips built at the Caswell site are performing well. The installation of equipment and facilities at Caswell is now complete, with the required inventory build on plan.
New cost reduction initiatives are being announced aimed at reducing further the company's overhead structure. As part of this, the company is reallocating and reducing its R&D spending in recognition of slower market growth and pursuing restructuring efforts to reduce manufacturing overheads. In addition, since the announcement of the downsizing of the ASOC platform in February 2003, the company has decided to discontinue its investment in this platform and will dispose of its wafer fab facility in Milton, UK.
As a result of the above actions, there will be additional general and administrative overhead reductions, especially in Milton.
The company expects these new cost reduction initiatives to impact approximately 160-180 jobs within manufacturing, R&D and support functions globally. Including previously announced actions, this is expected to result in the company having approximately 1500 employees by the fourth quarter.
The company believes that these actions will enable it to reduce its cash burn, as well as reduce its cash breakeven point to between £30 million and £35 million of revenue per quarter, by year end 2003.
On July 4, 2003 the company announced the acquisition of the business of Cierra Photonics, Inc, a company based in Santa Rosa, California. Cierra Photonics designs and manufactures thin film filters and other components for the fiber optics telecommunications industry.
Cierra's key technology is a specialized process that results in thin-film components that have lower costs, high yields and industry-leading optical performance. This acquisition opens up a large market area where the company has not been present to date, and allows cost reduction via internal sourcing of some components used in its amplifiers, and also improves the company's competitive position in optical subsystems. This acquisition helps growth in this area and also underscores the company's commitment to expand its position in the marketplace.
Laser Focus World