This is a summary of the fourth quarter fiscal 2008 earnings call conducted by Bookham, Inc. (BKHM: chart) on July 24, 2008.
Management:
President and CEO: Alain Couder
CFO: Steve Abely
VP of Finance, Corporate Controller: Jerry Turin
IR: Jim Fanucchi
Key Investor Issues:
- Net loss, which included a $3.8 million one-time gain on a legal settlement, was $1.9 million, or net loss of $0.02 per share.
- Revenue was $62.6 million, up 39% from $45.1 million in the fourth quarter of fiscal 2007 and 5% over the third quarter of fiscal 2008.
- Gross margin in the quarter was 22%, up 6 percentage points from a year ago.
- Cash, cash equivalents, short term investments and restricted cash at the end of June 2008 were $51.9 million, compared with $54.7 million at the end of the last quarter.
Fourth Quarter Highlights:
In the fourth quarter Bookham achieved revenue of $62.6 million, marking its fifth consecutive quarter of revenue growth. On a year-over-year basis, revenue rose 39% from a year ago while sequentially it increased 5%.
The company reduced its adjusted EBITDA loss to a proximity of several hundred thousand dollars this quarter compared to $6 million in the same quarter last year. On an annual basis, Bookham reduced fiscal 2008 adjusted EBITDA loss to $3.9 million from $38.1 million in fiscal 2007.
On the customer side, Nortel was 16% of total revenue while Huawei accounted for 13% of total revenue in the fourth quarter.
In addition to Nortel and Huawei, in the quarter Bookham had four customers each accounting for 5% of total revenue.
Results by Division:
Telecom revenue for this business was $47.4 million or 76% of total revenue, up from $43.9 million last quarter. The company is supplying Ciena with its 10 gigabit tunable pluggable transceiver. This product integrates Bookham’s Indium Phosphide technology which delivers a laser, a modulator and a receiver in a small module.
The tunable small form factor transponder which leverages the smaller size of Indium Phosphide component is growing fast, reaching 5% of Telecom revenue in the June quarter.
Today the company is shipping long-haul 40 gigabit products. Bookham also started showing such strategic customers its photonics integrated circuits that will significantly reduce the cost of long-haul and metro 40 gigabits.
Bookham recovered strong year-over-year growth of its 980 pump amplifier and subsystems.
Pricing pressure across the Telecom business continues to average about 15% a year. However, Bookham continues to improve its overall gross margin including more than 15 percentage point improvement in its tunable products last quarter.
Non-Telecom division includes R&D market products, precision measurements and high power laser. Sales increased 18% over the fourth quarter last year while declining by 4% sequentially. Bookham is seeing a typical showdown in these markets, both in semiconductor equipment and high power lasers. The company currently expects this softness to continue through the end of the calendar year.
In response to the customers’ stronger outlook, Bookham has decided to increase its spending on capital equipment in the next two quarters.
This investment will push net cap breakeven goal beyond the end of the September quarter. By making this investment Bookham intends to accelerate growth and gain market share. Bookham also believes non-GAAP operating income and cash flow from operation prior to any capital spending will be positive in the December 2008 quarter.
Fiscal 2008 Results:
- Annual revenues of $236 million represent an increase of 16% over the $203 million recorded in fiscal 2007.
- Within these results, over $22 million of growth came from tunable products.
