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May 24, 2004...Bookham Technology plc in England was a company everyone thought would dominate the compound semi optical communication sector after it acquired Nortel Networks' optical operations. There was a bit of controversy that surrounded that particular acquisition, however, rooted in the fact that a highly respected, key USA innovative company in tunable lasers named CoreTek was dropped from the Nortel group without adaquate explanation, causing mild chaos in the tunable laser community (ref: our coverage of CoreTek over the years). That was also about the same time that Emcore and TriQuint acquired Agere's optical operations. It looked for a time as though the emerging big three op companies would now be Bookham, TriQuint, and Emcore in that order, with minor players either hanging on, or grooming themselves for acquisition. Bookham also had the former Marconi optical operation... a potential powerhouse in the making.

Then the downturn took a further nosedive and anyone left alive kind of "laid low" until the things settled down again and it was safe to put your head up out of the hole and take a look around to see who else was still alive. The only company we heard from routinely that displayed any degree of optimism whatsoever was TriQuint. TriQuint's Ralph Quinsey continued to be that inevitable breath of fresh air, telling it as it was (and still is) and continuing to be as supportive of the compound semi community as possible. Then, things seemed to pick up a bit again for Bookham when it acquired yet another promising, classic Silicon Valley startup named New Focus which seemed to know its way around the laser business too, and Bookham's standing appeared positioned to rise again. At the first of this year, at Photonics West, sure enough, everybody came out of hiding and what journalists saw and reported was what looked to be a glut on the market for optical amplifiers and integrated transceivers. Then, sure enough again, companies like Bookham appeared to go back to a holding pattern and go back to being relatively quiet. And when they go quiet, it's difficult for observers and commentators to speculate as to who's on top in the compound semi portion of the optical sector, and making things more confusing, it seems like whatever news a company puts out there... or no news... the stocks just don't seem to rise much. Consensus appears to be that stock price isn't what determines who's on top and where folks are heading. What real customers actually buy is what matters.

We do know that TriQuint and Emcore are continuing to stay active in a number of different areas, (historically diversification helps mitigate sector downturns) and their savvy sales people are good at finding new applications areas that appear especially promising. Emcore's advanced solar cells, for example remains a steady bread and butter operation for them as long as people are launching new satellites. TriQuint continues to do quite well in wireless applications and as Ralph pointed out recently at the annual Mantech conference, automotive applications look especially promising. When Ralph co-chaired our 2004 Outlook, his optimism was contagious, so wherever TriQuint heads, others are likely to follow. Emcore's Reuben Richards and Anadigics' Ron Rosenzweig were also featured at Outlook for '04 and they brought with them confidence, and a biz as usual attitude, plus a reminder that these things are indeed cyclical and as Ron put it... "Believe it or not, times have been worse!"

Turning to Bookham's latest news and reading between the proverbial lines, we get the feeling that Bookham is putting reasonable faith in their newest acquisitions, and they appear to be moving towards a more diversified product portfolio. Their newest boilerplate (italics and ... added) underscores "design, manufacture and marketing of optical and RF components, modules and subsystems. Bookham’s disruptive technologies and broad product range... are used in various applications and industries, including telecommunications, data communications, aerospace, industrial and military. In 2002, Bookham acquired the optical components businesses from Nortel Networks and Marconi. In 2003, the company acquired Ignis Optics, Inc. and the business of Cierra Photonics Inc. In March 2004, the company completed the acquisition of New Focus, Inc... and employs approximately 1750 people worldwide." As of today's announced acquisition, add Onetta, Inc. of Sunnyvale, California USA which should be completed by early June.

Now Bookham will have two Silicon Valley companies under their banner. SiValley remains its usual hype/hip/hep self, only most of the former fat cats have slimmed down considerably if they haven't left to go into an entirely new field. Like real estate or politics. Bookham's New Focus has made its presence known most recently at CLEO/IQEC 2004, which was held in San Francisco. "The City by The Bay" (where I was born and raised) remains the pinnacle of Northern California high technology. San Francisco is actually about 40 miles miles north of the true Silicon Valley where New Focus and Onetta are located. Go another 40 or so miles North from SF and you find Santa Rosa, where Bookham has yet another optical arm doing thin film filters. Digressing even further... the fact that CLEO combined with IQEC is itself another indication of industry consolidation, which is once again becoming a familiar mantra. Personally, I think the trend to combine technical conferences is healthy and makes the trade show circuit easier on the exhibiting companies whose promotion resources are still being severely taxed. Co-occurring conferences, like IOP's upcoming CS-MAX co-locating with IEEE's CSICS (which this year is formally moving away from its old GaAs IC Symposium moniker) in October in Monterey, California is sensible and healthy, and a great way to improve the traffic at the combined exhibits.

Note too that "New Focus Inc." (as it was referred to in a recent Bookham press release) was able to retain its own identity. They used CLEO/IQEC to announce the "world debut" of New Focus as a division of Bookham. “The combined strength of New Focus and Bookham will offer customers a greater product range than ever before,” said Scott Dunbar, VP and GM of what officially is termed, at least in his title, of Bookham New Focus. (Whoops... guess it didn't get to totally retain its own identity after all.) The press release goes on to boost/boast its new parent saying that “Bookham’s world-leading optical components, modules and subsystems complement the expertise within New Focus in the application of photonics to the industrial market...." Product intros included a new ultra-high-vacuum Picomotor actuator plus the usual Picomotor lines, tunable lasers, high-stability mounts, balanced receivers and a wide variety of opto-mechanical and opto-electronic components. High power, ultra reliability laser diodes from Bookham Zurich and leading edge thin film filters for the 300-2500 nm range from Bookham Santa Rosa were also shown, which reminds us how many opto entities are now flying the Bookham flag.

My guess is that Bookham, which has been trading at a nervously low stock price (below $1 lately) is continuing to build and working hard at getting their arms around the new offsprings they've adopted. That is... when they're not handing out pink slips (it's been confirmed that they just layed off 600 people). The danger for Bookham is in history repeating itself, which I hope is not happening. But this reminds me of the behavior we saw in JDS Uniphase and Nortel itself as they gobbled up companies right and left, laying off those in redundant positions, and ending up divesting when the optical market didn't live up to their expectations. Shareholders and top management aside, that's very hard on the companies and employees being gobbled and spit back out. Bottom line... we look forward to the new look at Bookham and the new faces wearing Bookham's colors, and we hope to see all those faces (even the ones trading pink slips for new jobs elsewhere) smiling soon because of an upturn in the optical market.

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