Bookham suffers from weak dollar and poor sales outlook

Bookham Technology, which makes components for telecoms networks, warned yesterday that its first-quarter sales would take a hit from the impact of the weak dollar and normal seasonal trends.

Sales in the first quarter of the year, it said, should be between £20.5m and £22m - a fall from the £24m recorded in the fourth quarter of the year. Shares in the company, which had increased revenues for eight straight quarters, closed down 10 per cent at 147p.

Giorgio Anania, Bookham's president, said: "There is a seasonal effect in Q1 which we expect will probably hit us... operators tend to do their budgeting cycles at the beginning of the year but release the money more like mid-February."

There will also be a foreign exchange hit in the first quarter, he said, since most of the company's sales are made in dollars. Nevertheless, Mr Anania said he was confident Bookham was taking market share from its rivals while the market had bottomed out.

"I'm not calling an increase... my guess for an increase is towards the end of the year but we've shown we can grow share," he said, adding: "Growth in customers outside Nortel and Marconi is quite rapid." Those two customers comprised about two-thirds of Bookham's sales in the fourth quarter.

Bookham posted a fourth-quarter pre-tax loss of £9.3m yesterday - a marked reduction from the £46.2m loss that it recorded in the same quarter a year before. The company finished the year with nearly £40m of cash but will gain another $100m on completion of its acquisition of New Focus. That, Mr Anania said, would last Bookham three to four years.

Bookham burnt through about £9m of its cash in the fourth quarter but expects to get through about £10m to £12m in the current quarter.

Analysts at Evolution Beeson Gregory described Bookham's results as "in line" with expectations but cautioned that given the company was "unlikely" to break-even before 2005, the valuation looked "generous".