From streetadvisor
JDS Uniphase, Meet Bookham
Fayad Abbasi
Apr 7 2000
It seems everyone is trying to get into the optical market in some form or fashion. However, one company in particular is poised to challenge the way companies look at optical components: Bookham Technology. The company is slated to enter the public market soon, and despite the enormous hurdles it faces, and we are very optimistic about its future.
Bookham designs and manufactures optical components. But in contrast to its competitors, such as JDS Uniphase [JDSU], Bookham does not utilize the same devices to operate those components. According to its prospectus, ?While traditional fiber-optic component manufacturers combine discrete elements, such as lasers, lenses, and filters, in manually assembled devices, we can achieve the same functionality in a single integrated chip with our proprietary silicon-based optical circuitry.? Bookham has developed application-specific optical circuits, which combine the manufacturing expertise of silicon and the performance and scalability of fiber optics.
As of Dec. 31, 1999, the company employed 226 people. According to the prospectus, Bookham plans to raise about $274m with its initial public offering. With an estimated 118m shares outstanding, that would give the company a market capitalization of less than $2bn. That level values each employee at $7.3m, a slight discount to some of the current market cap rates for optical companies.
Bookham has some serious clout behind it, as well. Investors include Intel [INTC], Cisco [CSCO], and Scientific-Atlanta [SFA]; and Jack Kilby, the inventor of the integrated circuit, is a non-executive director.
However, the company has a long road ahead of it. With only $5m in revenues for 1999, it is a mere fly on the JDS Uniphase windshield. To compete in the market, it must develop its manufacturing expertise, distribution, marketing, and sales force. While the company does count Nortel, Lucent and E-Tek among its customers, it still needs to ramp up volumes quickly. But given its unique approach, we think Bookham can evolve into a strong supplier of optical components. |
