Do CEO changes signal broader industry changes?

Oct. 1, 2007
IRVINE, CA and SAN JOSE, CA-Recent press releases from Newport Corporation and Bookham announced the retirement of Newport’s chairman and CEO Robert G.

IRVINE, CA and SAN JOSE, CA-Recent press releases from Newport Corporation and Bookham announced the retirement of Newport’s chairman and CEO Robert G. Deuster and the appointment of Alain Couder as president and CEO of Bookham to succeed former Bookham president and CEO Peter Bordui. While the CEO changes occurred in two different photonics product areas; namely, integrated photonics solutions (including lasers, lab equipment, optics, and instrumentation) from Newport and optical components, modules, and subsystems for communications systems from Bookham, the appointment of new CEOs with very strong operations backgrounds to both companies may signal a shift away from product-line expansions and towards internal cost-cutting and revenue-growth measures.

In anticipation of Deuster’s retirement, Newport named Robert J. Phillippy to be its new CEO and to serve on the company’s Board of Directors. Phillippy is an 11-year veteran of Newport and served as its president and COO since July 2004. During this time, he helped drive the integration of the Spectra-Physics acquisition and the execution of Newport’s integrated photonics solutions strategy. Prior to that time, Phillippy served as VP and general manager of the U.S. operations of Newport’s Industrial and Scientific Technologies Division.

For its second quarter ended June 30, 2007, Newport sales totaled $110.9 million, a decrease of approximately 1% compared with the $112.4 million recorded in the second quarter of 2006. Newport reported income from continuing operations in Q2 2007 of $8.0 million compared with $9.2 million in Q2 2006. Deuster commented, “Although our total sales were less than we expected, we are pleased with the strength in sales to our research customers in the second quarter of 2007 after the slow start we had in the first quarter of this year. Sales to this market increased approximately 10% sequentially in the second quarter of 2007, as the customer funding delays that we experienced earlier in the year appear to have abated. In addition, we are encouraged by the record level of orders from the life and health sciences market. Unfortunately, the ongoing slowness in the semiconductor equipment market continued to hinder our overall sales growth in the second quarter. For the first half of 2007, our sales to customers in the microelectronics market were down 8% and orders were down 23% compared with the prior year period.”

At Bookham, Peter Bordui will continue to serve as Chairman of the Company’s Board of Directors. New Bookham president and CEO Alain Couder formerly served as president and CEO of Confluent Software and IP Dynamics, but also held COO positions at both Agilent Technologies and Groupe Bull.

For its fourth quarter and fiscal year ended June 30, 2007, Bookham reported revenue of $45.1 million, compared with $45.0 million in the third quarter of fiscal 2007 and $55.0 million in the fourth quarter of fiscal 2006. “In the fourth quarter, we made progress in lowering our overall cost structure, and as a result we have shown improvement in both our gross margin and Adjusted EBITDA. On the revenue side, we saw growth in several legacy products, particularly fixed wavelength 10 Gb/s transmitters and receivers,” said Bordui. “We announced that Alain Couder will join Bookham as president and CEO, effective August 13. We believe that with his extensive international executive experience and strong operations background, Alain will be able to lead the Company in achieving sustained profitability, revenue growth, and improved shareholder value,” said Bordui. “We are optimistic for the second half of the calendar year. We continue to execute on our cost reduction plans, which should further improve our overhead structure. Through sales of both new and legacy products, we’re currently expecting increased revenue from our three largest customers along with continued penetration into several other tier-one accounts.”

-Gail Overton

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