14th November 2006

Bookham Enjoys Bigger Sales From New Customers

Bookham, Inc., announced financial results for its first quarter of fiscal 2007, ended September 30, 2006. Its revenue was $56.4 m, compared with $55.0 m in the fourth quarter of fiscal 2006 and $62.6 m in the first quarter of fiscal 2006. Revenue from customers other than Nortel increased 15% sequentially to $41.8 m, up from $36.5 m in the prior quarter. Revenue from Nortel in the first quarter was $14.6 m, compared with $18.5 m in the fourth quarter of fiscal 2006.

Under generally accepted accounting principles (GAAP), gross margin in the first quarter was 17%. This compares with GAAP gross margin of 9% in the fourth quarter and GAAP gross margin of 23% in the same period a year ago. GAAP net loss in the first quarter was $22.9 m. Included in first quarter GAAP net loss are restructuring charges of approximately $2.9 m and an impairment charge of $1.9 m for the Paignton facility.
During the quarter, the Company also announced an agreement to sell its former assembly and test facility in the UK, which the Company expects to generate net proceeds of approximately $9 m upon the scheduled closing in November 2006.
"The continued growth in our non-Nortel revenue, which was up 15% over the prior quarter, and the positive impact of our cost reduction plans, resulted in better than forecasted first quarter gross margin and Adjusted EBITDA," said Dr. Giorgio Anania, president and CEO of Bookham, Inc. "In addition, Cisco revenue increased 47% over the prior quarter and accounted for 13% of total first quarter revenue, and our non-telecom revenue, which includes our industrial laser business, was up 14% sequentially to
$11.6 m.

"The current cost reduction plans are progressing as planned and are producing the significant savings we expected," said Dr. Anania. "We initiated our chip-on-carrier line in Shenzhen last month and are on track to complete this transition by the end of the year. Also, we are moving other functions to Shenzhen, which will result in additional staff reductions elsewhere as previously announced. Based on the success we have achieved to date, I expect our current cost reduction plan, which we began implementing in May this year, will have generated the $5.5 m to $6.5 m of quarterly cost savings by the March 2007 quarter.

"Our balance sheet is much stronger, due in part to the approximately $29 m in net proceeds we raised through the private placement of common stock in September. In November, we expect to raise $9 m through the sale of our former assembly and test facility in the UK, further strengthening our financial position," said Dr. Anania.
"The telecom spending environment continues to be healthy, especially in areas where Bookham has competitive product advantages. In addition, a number of our new products, especially our tuneable lasers, are seeing significant new design-in activity," said Dr. Anania. "I do not anticipate any letup in long-term customer demand and believe that in the second quarter we expect to achieve revenue growth and greater savings in our overhead cost structure through our cost reduction plans."

Web: www.bookham.com