Bookham is launching new cost cutting initiatives that include reallocating and reducing its R&D spending in recognition of slower market growth and pursuing restructuring efforts to reduce manufacturing overheads.

Bookham is launching new cost cutting initiatives that include reallocating and reducing its R&D spending in recognition of slower market growth and pursuing restructuring efforts to reduce manufacturing overheads.

The company has decided to discontinue investment in its "Application Specific Optical Component" (ASOC) platform and will dispose of its wafer fab facility in Milton, UK. This platform had been the subject of a downsizing effort announced in February 2003.

Bookham also reports Q2 revenues at GBP21.0mn, resulting in a net loss of GBP18.1mn. These figures compare with GBP7.1mn revenues and a net loss of GBP16.2mn in Q2 2002.

Consolidation of the company's Ottawa fab in Canada into its Caswell facility in the UK is already underway and should be completed in Q3 2003. Initial product qualifications of chips built at the Caswell site are performing well, Bookham reports. The installation of equipment and facilities at Caswell is now complete, with the required inventory build on plan.

The new cost reduction initiatives are expected to impact 160-180 jobs within manufacturing, R&D and support functions globally. With previously announced actions, this is expected to result in the company ending up with 1500 employees by Q4 2003. The company's cash breakeven point should be reduced to between GBP30-35mn of revenue per quarter by year-end.

Long term prospects for the company are "extremely difficult to predict". Q3 revenues are expected to be slightly higher than Q2 in the range GBP21-24mn. Cash burn is expected to be in the range GBP20-23mn.

In February, the company had a target for quarterly sales of GBP45mn and breakeven by the end of the year, but this has now been abandoned.

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