Bookham, Inc. (Nasdaq: BKHM), a leading provider of optical components, modules and subsystems, announced financial results for its second quarter of fiscal 2007, ended December 30, 2006. 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.
Under generally accepted accounting principles (GAAP), gross margin in the second quarter was 15 percent. This compares with GAAP gross margin of 17 percent in the first quarter and 27 percent in the same period a year ago.
GAAP net loss in the second quarter was $21.3 million, or a net loss of $0.31 per share. This compares with a GAAP net loss of $22.9 million, or $0.38 per share, in the first quarter and a GAAP net loss of $11.9 million, or $0.28 per share, in the second quarter of fiscal 2006.
Bookham provides certain supplemental non-GAAP financial measures, including non-GAAP net loss excluding non-cash stock and option-based compensation, charges such as impairment and restructuring, litigation settlement/recovery, early debt extinguishment, and acquired in-process research and development, along with a measure of Adjusted EBITDA, that also excludes these charges, plus the impact of taxes, net interest income/expense, depreciation and amortization, and net foreign currency translation gain/loss, to provide investors with the opportunity to use the same financial metrics as management to evaluate the Company’s performance. Bookham also believes these non-GAAP measures enhance the comparability and transparency of results for the period. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. A reconciliation table of GAAP to non-GAAP measures is included in the financial tables section of this release, and further discussion of these measures is also included later in this release.
Second quarter non-GAAP net loss, which excludes non-cash stock and option-based compensation of $1.9 million, was $18.0 million, or a net loss of $0.26 per share. This compares with a non-GAAP net loss of $15.7 million, or $0.26 per share in the first quarter. Please see additional information in the section “Non-GAAP Financial Measures” below.
Second quarter Adjusted EBITDA was negative $10.4 million, compared with Adjusted EBITDA of negative $7.7 million in the prior quarter and positive $0.7 million in the second quarter of fiscal 2006.
Cash, cash equivalents and restricted cash at the end of the second quarter were $51.5 million, compared with $58.2 million at the end of the first quarter.
Outlook and Guidance
“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 build-up and the completion of the purchase agreement,” said Dr. Giorgio Anania, president and CEO of Bookham Inc. “At the same time, we expect modest sequential growth in our non-Nortel revenue in the third quarter because of normal seasonality and some inventory draw-down at selected 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.
“Given these recent developments, we are immediately undertaking an aggressive overhead cost reduction plan, which when fully implemented is designed to save an additional $6 million to $7 million per quarter in the September 2007 quarter. The savings will come mainly from reductions in our workforce, consolidation at our UK semiconductor operation, and shifting more development activities to China,” said Dr. Anania. “By taking these additional actions, we believe our Adjusted EBITDA quarterly breakeven level can be achieved at a quarterly revenue level of approximately $55 million to $57 million.
“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. 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,” said Dr. Anania. “Taking into account our planned overhead reductions, we expect to achieve Adjusted EBITDA breakeven by the end of the September quarter, assuming our revenue goals can be achieved.”
The following forecasts are based on current expectations. These statements are forward looking, and actual results may differ materially. Please see the Safe Harbor statement in this release for a description of certain important risk factors that could cause actual results to differ, and refer to Bookham’s annual and quarterly reports on file with the Securities and Exchange Commission (SEC) for a more complete description of the risks. Furthermore, our outlook excludes items that may be required by GAAP such as restructuring and related costs, acquisition or disposal related costs, impairments of goodwill and other long-lived assets for which the likelihood and amounts are not determinable at this time, extraordinary items, as well as the expensing of stock options and restricted stock grants under SFAS 123R.
For the third quarter of fiscal 2007, ending March 31, 2007, excluding restructuring and other non-recurring charges, the Company expects:
- Revenue in the range of $44 million to $48 million
- Non-GAAP gross margin to be between 8 percent and 12 percent
- Adjusted EBITDA of approximately negative $12 million to negative $16 million
Bookham scheduled a conference call to discuss its second quarter fiscal 2007 financial results. A replay of the conference call via the Investors section of the Company’s website will be available through Feb. 8, 2007. To access the replay, dial 1-973-341-3080. The conference code for the replay is 8341089.
Bookham, Inc. is a global leader in the design, manufacture and marketing of optical components, modules and subsystems. The company’s optical components, modules and subsystems are used in various applications and industries, including telecommunications, data communications, aerospace, industrial and military. Since 2002, the company has acquired the optical components businesses from Nortel Networks and Marconi, as well as Ignis Optics, Inc., the business of Cierra Photonics Inc., New Focus, Inc., and Onetta, Inc. The company has manufacturing facilities in the UK, US, Canada, China and Switzerland; and offices in the US, UK, Canada, France and Italy and employs approximately 2000 people worldwide.
Bookham and all other Bookham, Inc. product names and slogans are trademarks or registered trademarks of Bookham, Inc. in the USA or other countries.