One of Bookham’s largest customers, Nortel, cut its order of mini-DIL transmitters and receivers in January, which was followed by a profit warning from Bookham. Now Bookham has confirmed it will shed about 15 per cent of its staff, mostly from mini-DIL manufacturing and related engineering.
The cuts bring an abrupt halt to Bookham’s rapid expansion, which had seen its workforce increase fivefold in 2000.
A spokesman for Nortel said the decision to reduce its Bookham order was a “knock-on effect” of the US slowdown which had seen Nortel announce last month that it was cutting 10,000 jobs and revising its revenue and earnings forecasts from 30 per cent down to 15 per cent.
Gartner Dataquest analyst Peter Kjeldsen was not surprised by the Bookham cancellation, “since the recent troubles for system vendors such as Nortel are bound to send ripples down the optical value chain”.
Eurolan analyst Keith Humphreys was sceptical about the impact of the US slowdown upon the UK, warning: “We’re in danger of talking ourselves into a recession.
“Certainly the service providers are finding increased competition, and there are projects going on hold.” But Humphreys brought into question the value of “postponing a deal assuming it’s going to slow down here. The UK looks pretty healthy”.
Of the troubled service provider companies, Humphreys maintained, “companies like Cisco and Nortel will weather the storm better than those focussed purely on enterprise or service provider markets”.