The company expects these plans to reduce overhead $by 9 to $10 million on a quarterly basis from the December 2006 quarter level. These savings include the benefit from the plan announced last quarter and previous plans.

In the March quarter, Bookham saw approximately $2.5 million of savings from these plans and therefore have another $6.5 to $7.5 million remaining to be achieved. The savings in the March quarter relate primarily to workforce reductions at the Paignton site as the company essentially completed the closure of the manufacturing operations in Paignton and the site transitions to being the company’s development center for optical packaging.

The company expects to achieve approximately 60% of the total savings in the June quarter, 80% in the September and the full benefit in the December quarter.

- First, the company is consolidating section of its wafer production in Caswell, UK semiconductor facility. The majority of the employees affected by this move left the operations towards the end of the March quarter. The remainder of the savings will occur when the related facility work is completed. This is scheduled to be completed in the September-October timeframe.

- The second action involves shifting certain development activities including closing the development operations in Ottawa and transferring these and other functions to the Paignton and Shenzhen operations. The company expects to see initial savings from these actions in June with the majority completed in the July-August timeframe.

- The third area involves targeted overhead reductions and manufacturing development and administrative areas including transferring more function to the Shenzhen. These efforts are now underway and a significant portion of the savings will be seen in the June quarter with the remainder in September.

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.