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Bookham Inc. (NASD:BKHM), the maker of optical components for the telecommunications and data communications markets, has never quite gotten its house in order. Its recent fiscal Q3, ending April 1, 2006, continued a string of lackluster results. Revenue for the quarter was $53.4 million down from $60.7 million in the immediately previous quarter and up slightly from $49.9 million in the quarter a year ago. Declines in the company's business with Nortel (NYSE:NT) were partially to blame.

Bookham has an operating loss of $30 million in the quarter, with $7.2 million of that relating to a legal settlement. A year ago, the operating loss was $9.9 million. Adjusted EBITDA was a negative $10.7 million compared to a loss of $700,000 in the immediately previous quarter and a negative $17.6 million a year ago. The company said it planned to cut overhead spending by $5 to $6 million a quarter. Guidance for top line in the next quarter is $52 to $55 million. In other words, no growth.

Bookham's gross margins are truly awful. They have been running about 10% and the company says they could drop as low as 6%. Under those circumstances, it is difficult to see how the company can make money.

The company's stock now trades around $5 on a $10.36/$2.57 52-week high/low. Given that the company's revenue has been flat to down since the July 2, 2005 quarter, it is surprising the stock is not lower in its range.

BKHM 1-yr chart

Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He is also the former president of Switchboard.com, which was the 10th most visited site in the world at the time, according to MediaMetrix. He has been chief executive of FutureSource LLC and On2 Technologies, Inc. and has served on the boards of TheStreet.com and Edgar Online. He does not own securities in companies he writes about. He can be reached at douglasamcintyre@gmail.com.

Source: Bookham's Business Falls Apart (BKHM)