This summary is based on the first quarter fiscal 2007 earnings call conducted by Bookham, Inc. (BKHM: chart) on November 06, 2006.
Key Investors Issues
- Net loss was 38 cents a share compared to net loss of 2 cents per share in prior year.
- Revenue was $56.4 million compared to $62.6 million a year ago.
- Gross margin rose to 17% from 9% in Q4, but decreased from 23% a year ago.
- GAAP net loss was $22.9 million compared to $0.5 million last year.
First Quarter Fiscal 2007 Highlights
Revenue was $56.4 million, up 3% compared to $55 million in the prior quarter.
- Non-Nortel revenue increased 15% sequentially to $30.2 million. Growth in this area was highlighted by a 35% sequential increase in revenue from Cisco to 13% of total revenue.
- Revenue with Huawei remained strong and was under 10% of quarterly revenue.
- Revenue from Nortel was $14.6 million or 26% of totals revenue compared with 18.5% or 34% of total revenue last quarter. Revenue from Nortel in the first quarter was $14.6 million, compared with $18.5 million in the fourth quarter of fiscal 2006.
Non-telecom revenue, which is primarily composed of new focus in industrial laser business, has increased 13% in the current quarter to $11.6 million.
High power laser business grew 39% over the prior quarter as the company continued to penetrate this market and expand its customer base in this area.
The gross profit and corresponding gross margin in the first quarter excluding stock compensation of $600,000 was $10 million or 18% of revenue for the quarter.
This compares with non-GAAP gross profit of $4.9 million, over 9% in the June quarter. This ongoing improvement in gross margin is being driven by lower cost from the move of assembly and test Shenzhen and the other restructuring actions. The company achieved improvements in yields and lower costs on certain products resulting in higher overall contribution margins.
- In the June quarter, the company incurred an approximate $3 million in charges related to stock wafer stock inventory. During the September quarter, it did not incur any unusual inventory recharges.
Non-GAAP operating expense included one time gains and charges and stock compensation of $1.3 million was $25.2 million, a similar amount compared with last quarter.
R&D expenses excluding stock compensation were $11 million dollars compared with $10.8 million in the June quarter as savings related to restructuring plan announced in May or offset by the site cost attainment, which were reclassified from operations to R&D.
Total stock compensation expense in the September quarter was $1.9 million of which $600,000 was included in cost of sales and $1.3 million was in operating expenses.
Stock compensation in June the quarter was $1.6 million.
The company recorded restructuring impairment charges of $4.8 million in the current quarter versus $6.4 million in the last quarter.
Included in the charges from the current quarter was an impairment charge of $1.9 million associated with writing down the carrying value of the paint in site to realizable value on the eventual net proceeds of the sale of approximately $9 million.
June quarter charges were unusually high due to $4.4 million in severance and retention costs associated with work force reductions results from transitioning the chip-on-carrier line from Paignton to Shenzhen and the cost reduction plan announced in May.
In June of 2004, the company announced the restructuring plans and included the transfer of assembly and test to China.
By the end of September quarter, the company had recorded approximately $26 million of restructuring charges related to this plan, which essentially completes the charges for this restructuring plan. The company has seen $8 million to $9 million per quarter in cost reduction from 2004 plan. The move to Shenzhen has significantly improved contribution for both, labor costs, labor savings, better production yields and lower scrap costs.
