Bookham moots more cuts as losses grow

The beleaguered company has been among the hardest hit during the technology downturn and had to reduce its headcount by almost 40% in an attempt to realign costs with diminshing revenues. Its focus remains on achieving sales growth from customers such as Marconi, Nortel Networks and Fujitsu Telecom.

Bookham's sales fell by more than half to £5.6m, when compared with the previous year, yet improved 169% on the previous quarter due in part to the contribution from Marconi's optical components business, purchased by Bookham in early-February.

Bookham spent £21.7m on the loss-making Marconi acquisition to try and boost revenues. As part of the deal, Marconi agreed to guarantee orders worth £30m, but investment bank Cazenove - which recently downgraded the stock to a 'hold' rating - said another condition of the sale was the transfer of 300 personnel, increasing Bookham's bottom-line by around 30%. Bookham is reliant on troubled Marconi for 55% of its sales.

The decline in sales worsened the company's loss to £17m compared with £11.7m last year. Some £4.2m of this loss was attributed to a write-off relating to research and development costs from the Marconi acquisition.

The company has a healthy cash position, with more than £162m in the bank at the end of March, which it hopes will be more than enough for it to emerge from the gloom intact. With a quarterly cash-burn in excess of £22m, the downturn would have to continue for at least another two years for it to run out of funds. Most industry-watchers believe the telecoms sector will become healthier in 2003.

Bookham said it expects sequential quarter-on-quarter sales growth for the remainder of the year, even if the market does not improve. It also "expects to continue the trend of past quarters of reducing overhead costs and cash burn".

Its first-quarter results beat the consensus market forecast regarding sales and net loss, but Bookham and its investors will be hoping for a second-half improvement in the telecoms market to elimate the negative value placed on its business, with shares currently trading at a discount to its cash value.

Shares are trading 6.2% higher at 86p, capitalising Bookham at just £122m. The company stated net assets at £209.7m.

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