This summary is based on the third quarter fiscal 2007 earnings call conducted by Bookham, Inc. (BKHM: chart) on May 3, 2007.

Chairman, Interim President and Chief Executive Officer: Dr. Peter Bordui
Vice President of Sales and Marketing: Adrian Meldrum
Chief Financial Officer: Stephen Abely

Key Investors Issues

- Revenue for the quarter was $45 million, compared with $56.3 million in the second quarter of fiscal 2007, and $53.4 million in the third quarter of fiscal 2006.
- Revenue from customers other than Nortel was $41.9 million, essentially flat with the prior quarter and up approximately 43% compared with the third quarter of fiscal 2006.
- GAAP gross margin in the third quarter was 10% compared with GAAP gross margin of 15% in the second quarter and 11% in the same period a year ago.
- Third quarter GAAP net loss was $24.3 million, or a net loss of 35 cents vs. GAAP net loss of $21.3 million, or 31 cents per share, in the second quarter and a GAAP net loss of $48 million, or 90 cents per share a year ago.

Third Quarter Financial Highlights

Third quarter revenue was $45 million compared with $53.6 million last quarter and $53.4 million a year ago.

- The prior year results included $9.1 million of revenue from last time by products sold to Nortel under the supply agreement.
- Non-Nortel revenue of $41.9 million was up slightly over the prior quarter and up 43% over the third quarter of fiscal 2006.
- Revenue to Nortel in the March quarter was $3.1 million after the expiration of Bookham’s supply agreement in December 2006.
- Revenue from Non-telecom business was $13 million, a increase of 11% sequentially and 43% over the same period a year ago.

Third quarter gross margin excluding stock compensation was 11% compared to 16% in the previous quarter.

Lower revenue partially offset by improvements in the company’s manufacturing overhead cost was the primary reason for the sequential decline.

GAAP operating loss in the quarter was $25 million vs. $19.4 million in the prior quarter.

- GAAP net loss was $24.3 million or 35 cents per share compared with a net loss of $21.3 million or 31 cents per share in the previous quarter.
- R&D expenses excluding stock compensation declined to $10.6 million from $11.1 million in the previous quarter.
- SG&A cost excluding stock compensation increased to $11.5 million from $11.2 million in the prior quarter primarily due to certain non-recurring professional fees.

Third quarter stock compensation expense was $1.3 million of which $500,000 was included in cost of sales and $800,000 was included in operating expenses.

- Stock compensation last quarter was $1.9 million.
- The company recorded restructuring charges of $4.3 million vs. $1.3 million in the previous quarter. The increase is mostly related to the cost associated with the recent cost reduction plan.
- Other income and expense, which is primarily interest in the effect of foreign currency translation was $800,000 compared with $1.9 million in the previous quarter.

Non-GAAP operating loss for the December quarter was $19.5 million versus $16.2 million last quarter.

- Non-GAAP operating expenses which exclude one-time gains and charges and stock compensation were $24.2 million versus $25 million last quarter.
- Non-GAAP net loss in the quarter was $18.8 million or 27 cents per share versus $18.1 million or 26 cents per share of last quarter.

The weighted average share count for the third quarter was 70.1 million.

The company expects the share count at the end of the June quarter to be approximately 82.4 million.

Balance Sheet Details

- Cash, cash equivalents, and restricted cash at the end of March were $61.7 million versus $51.5 at the end of December.
- Accounts receivables decreased to $31 million from $33.8 at the end of December.
- Day sales outstanding were 62 compared with 56 in the previous quarter. DSOs were impacted by lower revenues and customer mix.

Inventory of $49.8 million was essentially flat from the previous quarter.

Inventories stabilized with the closure of Paignton manufacturing operations. However, inventory turns decreased from 4.5 at the end of December to 3.6 at the end of March with the decline in revenue.

Adjusted EBITDA was negative $14.1 million compared with $10.4 million last quarter.

- Depreciation and amortization were $3.3 million and $2.2 million respectively in the third quarter. This compares with $3.3 and $2.5 million respectively in the prior quarter.
- Capital spending was approximately $1.7 million with most of the spending resulting, the result of expanding test capacity for iTLA and other products.
- Quarterly capital expenditures are expected to be in the range of $2 to $3 million over the next few quarters.

Fourth Quarter Forecast