Optical component quarterly sales top $1 billion for second sequential quarter

2007 revenues up 4% compared to 2006

For immediate release, 20 March 2008. Ovum RHK today released its preliminary analysis of fourth quarter 2007 results for optical components vendors. The optical component (OC) market overall finished 2007 strong with quarterly revenues of $1.1 billion, up 3% sequentially and 4% versus 4Q06. Full-year 2007 revenues topped $4.0 billion, up 4% compared to 2006.

According to Daryl Inniss, Vice President and Practice Leader for Communications Components at Ovum RHK, inventory effects are still impacting revenue growth although the impact is not as strong as experienced in 1H07. "We still believe that market conditions are positive up the food chain. Traffic growth, dominated by IP data, continues, and traffic demand from wide-scale demand for video is yet to come." Equipment vendors in all segments are reporting strong revenue gains, another indicator that the market is continuing to expand. However, a North American recession and the impending credit crunch can negatively impact telecommunications market expansion, particularly in 2H08", says Inniss.

4Q07 revenue and share highlights for optical components market top ten vendors:

• Of the top ten vendors, MRV (Luminent), Finisar, and Optium all achieved double-digit sequential revenue growth (15%, 13%, and 12%, respectively).
• Intel rebounded from a weak 3Q with sequential growth of nearly 30% in 4Q07.
• Opnext, one of the few vendors unscathed by the inventory reductions that plagued 1H07, experienced its first down quarter since early 2006. Opnext revenues were down 13% sequentially but were still good enough for an 8% increase over 4Q06.
• MRV (Luminent) and Oplink, the vendors with the largest revenue increase over 4Q06, were this quarter's largest rolling 4Q share gainers. Both vendors' share gains come principally from acquisitions - Fiberxon for MRV (Luminent) and OCP for Oplink.
• The share gains by Sumitomo and Optium are impressive because they appear to be organically derived. One might argue that Optium's growth was based on its acquisition of Engana and Kialight, but the revenues of these entities were essentially zero at the time of the acquisition. For Sumitomo, its growth may be attributed, in part, to its introduction of an SFP+ transceiver.
• JDSU, which was hit hard by the inventory correction in 1H07, posted the largest share loss (-0.2%) despite posting a strong quarter.
• Optium, after gaining share the past two quarters, displaced Furukawa from the number ten spot.
• Ends -

For further information:

For more information or to speak with Daryl Inniss about this research, please contact Sara Kaufman, Public Relations, sara.kaufman@ovum.com, 617 722 4602, or a member of our global PR team listed below.

About Ovum:

Ovum RHK provides market research advisory services to telecom equipment and component vendors and service providers alike. Ovum RHK is a part of Ovum, advising on the commercial impact of technology and market changes in telecoms, with offices in London, Paris, Cologne, Boston, Melbourne, Seoul and San Jose.

About Ovum:

Ovum's primary activity is providing value-added advisory services and consulting to retained and project clients. The company acts as a well-respected and trusted source of industry data, knowledge and expertise on the commercial impact of technology, regulatory and market changes. Ovum engages in continuous research and industry analysis to determine market dynamics in its specialist sectors.

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Ovum is part of the Datamonitor Group.

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