re: optical company Bookham Technology (Warning - Pebble Alert) . While many of us here own shares of JDSU (me included) some have also been fortunate this year to own SDLI and GLW (not me). I came across Bookham (BKHM) while doing research on JDSU and I find them quite interesting. While BKHM is clearly a pre-chasm pebble, I thought I would post a little about them, and those so inclined could read up over the long weekend.
BKHM was incorporated in 1988 in England and they just IPOed in April. They apparently spent 12 years working on an idea, which may now bear fruit, and may be a discontinuous innovation. Goldman, Sachs & Co. was the lead underwriter. Shareholders before the IPO included Cisco, Intel and Scientific-Atlanta. Cisco and Intel each owned 5.7 million shares before the IPO while Scientific-Atlanta owned 6 million (each is now about a 5% owner). The prospectus also lists 14 shareholders who are officers and/or directors. These individuals collectively owned 32.5 million shares. Interestingly, none of those officers/directors or the three companies, sold any shares in the IPO. At the time I read the Prospectus I thought that was impressive, that even after 12 years they were not ready to cash in. However, they are already talking about a secondary offering. One of the directors is Jack Kilby, who is said to be the inventor of the integrated circuit, he owns approximately 76,000 shares.
This is what they say they do: "We design, manufacture and market optical components based on silicon chips that generate, detect, route and control light signals in fiber-optic telecommunications networks." "we believe we are the first company to integrate light processing functions on a silicon chip using high volume semiconductor manufacturing methods. Our products allow fiber-optic networks to be constructed efficiently with advanced capabilities to combine, manipulate and process light signals to meet the growing demands of Internet traffic. Our customers include major telecommunications equipment companies in the United States and Europe, who incorporate our products into fiber-optic network systems, which they in turn sell to telecommunications operators. We are based in the United Kingdom, have offices in the United States, France and Japan, and are supported by an international network of distributors and agents. "
"Our silicon integrated optical components, which include devices to transmit and receive optical signals, known as transceivers, and devices to increase system capacity, known as wavelength division multiplexers (WDMs), are designed to overcome cost, production, functionality and performance challenges inherent in current fiber-optic network systems. Traditional component manufacturers combine discrete active and passive elements, such as lasers, lenses and wavelength filters, in manually assembled devices. Using a process similar to the one used to produce microelectronic chips widely used in computers, we can achieve the same or
better functionality as compared with traditional optical components with our proprietary silicon-based integrated
optical circuitry. This technology, which we have trademarked under the name ASOC, enables us to apply the
basic material used for integrated electronic circuits—silicon—to build high-quality integrated fiber-optic devices. We believe our technology offers several important features:
-Scalable high volume production, so that we can design and implement product variations quickly and increase production volumes with minimal delay or dislocation;
-Higher performance, through the integration of multiple optical functions on a single chip;
-Compact size, taking advantage of the compactness of silicon chips to reduce component size and energy requirements;
-Lower cost, by using processing techniques derived from the semiconductor industry;
-Simplified packaging, by eliminating the need for precise manual manipulation of components; and
-Reliability, by reducing the number of interfaces between separate components.
Our objective is to be the leading global provider of integrated optical components to telecommunications and
network system providers and thereby capture a significant share of the fiber-optic component market."
Major customers, including Nortel, E-TEK (JDSU), Marconi, Lucent and Fujitsu.
from theStreet.com (May):
Bookham, which was founded in 1988, has devised a
revolutionary approach to manufacturing optical
components -- which generate, detect, route and control
light signals in fiber-optic telecommunications networks
-- based on silicon chips. This process, known as ASOC, replaces the conventional labor-intensive approach to manufacturing optical components with standard high-volume semiconductor production methods... the conventional method of manufacturing optical integrated circuits is slow and this has led to a shortage in these components. Bookham may solve this in one fell swoop with its high-volume, highly scaleable and potentially low-cost production method and design.
and from Briefing.com (late June):
If Bookham Technology plc (BKHM) were based in the Silicon
Valley, the company would probably sport a market-cap 2-3 times its current level... The UK-based designer of
optical components for use in fiber-optic telecommunications networks has traded in relative obscurity since its initial public offering two months ago...
.....................
According to the Fool.com on 9/1 Bookham was selling at a Price/Sales (TTM) of 388. However, the site notes that their Price/Book (MRQ) is just 21.
from an August article:
Jesse Soto is Senior Securities Analyst for the Highmark Mutual Funds.
"One company Soto likes in fiber optics is Bookham Technology (BKHM 58), which manufactures optical components based on SOI (Silicon On Insulator) wafers using traditional semiconductor manufacturing techniques. Soto adds that Bookham is addressing one of the biggest problems in fiber optics right now -- the availability of components. Soto states, "Large volume manufacturing techniques haven't been developed yet in the fiber optic component space. Many of these devices actually involve a lot of steps done by hand. By using traditional semiconductor manufacturing techniques, Bookham is trying to do what Intel did for microprocessors, which is to bring down cost through manufacturing large volumes. . . They're really the only one out there doing this on silicon. Most of its competitors are using a type of glass known as silica.""
Revenues are tiny, just 7 mil last quarter, but that was up 1000% from the prior year. They are not yet making money, but some analysts expect profitability some time in 2001. Nortel accounts for better than half of their revenues and a recent rumor (denied by both) says that Nortel will take them over. Bookham did sign a recent supply agreement with Marconi, which may lessen their dependence on Nortel.
It might be interesting to watch this one develop.
StockHawk |
