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CIENA and Bookham: A Good Match?

reasons to be cautious on BKHM:
-13.7% operating margin (ttm)
only 50mm in cash with -39mm levered free cash flow (ttm)
major >10% customer is Nortel who is selling off their optical business
major customer is Ciena who pre-announced weak sales

reasons to be bullish on BKHM:
amount of money lost each quarter getting smaller
some interesting product announcements

reasons why a systems company is unlikely to buy an optical company
a) systems companies all spun out their optical subsidiaries pre-bubble or during the telecom bubble
b) premise is to "realize public value" of these businesses
c) additional premise is to allow optical companies to sell to many different system vendors & carriers and therefore address a larger market. if the optical company is in-house then they can typically only sell to the in-house customer and not external
d) Ciena would rather buy from many suppliers than support the R&D for an in-house optics team