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31 July 2007


Optium hit by drop in sales of high-end 300-pin products to main customers

For its fiscal fourth-quarter 2007 (to end July) Optium Corp of Horsham, PA, USA, which manufactures optical subsystems for core-to-the-edge applications in telecoms and cable TV networks, expects revenue of $26.0-26.5m (down 23-25% from the previous quarter’s $34.5m), on the basis of preliminary financial information.

Optium also expects to make a net loss, driven by lower-than-expected revenue, lower-than-expected shipments of higher-margin products, as well as under-absorption of manufacturing overhead and potential provisions for inventory reserves resulting from the lower-than-expected revenue.

“Our long-term view of demand for our products and market share with our customers continues to be strong, but certain timing issues with some of our customers significantly impacted our performance this quarter,” says chairman and CEO Eitan Gertel.

The most significant factor affecting revenue was a decline in sales of high-end 300-pin products to Optium’s historical two largest telecoms customers (first experienced in the third quarter, but more pronounced than expected in the fourth quarter). This was mainly as a result of the timing of certain projects at the carrier level. Optium’s four top 10% or greater end customers for fiscal 2007 were Scientific Atlanta/Cisco, Ericsson, Alcatel Lucent and Tellabs. Another factor was later-than-expected integration of Optium products by its previously announced new cable TV customer, which caused a partial delay of shipments.

However, Optium expects some demand recovery for high-end 300-pin 10Gb/s products during its fiscal first-quarter 2008. “Looking ahead, we believe demand for network bandwidth and agility driven by growth in video and telecom applications will be the fundamental drivers of our business. We believe we are well positioned to take advantage of these trends,” says Gertel. “Key customer indications and our market observations point to strong long-term demand for 10Gb/s and 40Gb/s telecoms products,” he adds. “We made our first commercial shipments of both long-haul and client-side 40Gb/s transceivers in the fourth quarter and initial customer demand for these products appears strong.”

In addition, fourth-quarter revenues from reconfigurable optical add/drop multiplexers (ROADMs) more than doubled from the third quarter. “We believe our ROADM product line is continuing to gain momentum with demand building for fiscal 2008,” says Gertel. “In cable TV, we are in the early stages of growth with our new customer after making initial commercial shipments in the fourth quarter.” This development, combined with expected positive long-term cable TV market trends, is projected to be an important part of Optium's long-term growth.

“Based on customer forecasts and discussions, we are cautiously optimistic that the timing issues that impacted us in the fourth quarter are abating and that continued momentum in other areas of our business should translate to future growth,” says Gertel. Optium expects to report its full fourth-quarter and fiscal 2007 results in mid-September.

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