Key questions and answers from the third quarter fiscal 2007 earnings call conducted by Bookham, Inc. (BKHM: chart) on May 3, 2007.

John Harmon (Needham & Company): Do you have any fiber laser customers for your pump diodes right now? And if so, how many?

Peter Bordui: Yes, we do have customers right now. It’s quite a broad base of customers given the fact that they are spread over multiple industries.

John Harmon: In the March quarter you added some iTLA customers. How many of them are Tier 1?

Peter Bordui: We can’t run specific customer names. We are shipping in volume to probably two lead customers and then we have designed wins with probably three or four players beyond those lead two.

Jeffrey Osborne (CIBC): The Cisco revenue dropped 50% sequentially. What is the impact of their inventory initiatives for Bookham?

Peter Bordui: We have a continuous firm relationship with Cisco and working on new products with them. Over a time Cisco has been implementing inventory reduction programs and the impact of that is seen in optical components. That’s one of the customers we would expect to come back in the second half with the top line guidance that we gave there as well. We expect some of this inventory initiatives to hit us in the June quarter and we expect to see recovery from those in the second half.

Jeffrey Osborne: How big do you think is the submarine market? One of your competitors talked about a $25 million annual market for the submarine pump laser and you indicated that you are gaining share. Historically that was a greater than 40% gross margin business. When will that play out in the September quarter and how meaningful could the Tyco win could be for you and what would the contributions from gross margins be?

Peter Bordui: In terms of the market size, we are looking at about $25 million year market for non-laser pumps in summary applications. In terms of specifics around Tyco we can’t go into detail but in terms of shipment into submarine customers, we expect those in the September quarter and that will be fairly significant revenue. In addition to that, we expect to bring on a second customer in the second half of 2007

Jeffrey Osborne: What are you seeing both on the tunable side and also on some of your older components in terms of pricing?

Peter Bordui: We don’t break out pricing erosion or forecast by products. Over our entire product set, we are seeing pricing declines of between 10% and 15% but there are always outlays on that both on the high side and the low side, dependent on the competitive positioning and the individual product set.

In terms of the tunable, again it is difficult to break out given that we not only have a wideband tunable laser, but we are also bringing the tunable transmitter to market and small form factor tunable transponder. There are different pricing dynamics for each of those products given the fact that in two of them we have a leadership position of time to market.

Jefffrey Osborne: Was there any impact on pricing this quarter rather than the lower overhead absorption with annual pricing renegotiations starting January 1st?

Peter Bordui: No, we didn’t see any material impact in terms of pricing negotiations. We have these negotiations regularly and they didn’t have a major diverse impact. Different customers have pricing negotiations on different schedules.

Mike Ethan (Merriman): Do you still perceive being EBITDA breakeven by yearend?

Peter Bordui: We have said that what we think is required from a revenue point of view to get EBITDA breakeven. We expect some pretty strong sequential revenue growth in the second half of the year but as for giving precise timing of when we expect that to happen, we are not prepared to do that right now.