Optium Corporation Announces Third Quarter Fiscal 2008 Results

Record Revenues of $45 Million Driven by High-Growth Product Lines and Customer Diversification


HORSHAM, Pa., June 5, 2008 (PRIME NEWSWIRE) -- Optium Corporation (Nasdaq:OPTM), a leading supplier of high-performance optical subsystems, today reported financial results for the third quarter of fiscal year 2008 ended May 3, 2008.

Revenues for the third quarter of fiscal 2008 were $45.0 million, representing an increase of 30.3% from $34.5 million for the same period in the prior year. Compared to the prior quarter, revenues increased 11.7% from $40.3 million.

Record revenues for the third quarter were driven by sequential growth across all product lines -- 10Gb/s and 40Gb/s, ROADMs and Analog & Cable TV. Revenues from Optium's 40Gb/s and ROADM product lines grew substantially compared to the prior quarter, as Optium continues to broaden its portfolio of 40Gb/s and ROADM offerings while expanding manufacturing capacity to meet customer demand. Revenues from 40Gb/s products grew 29.5% sequentially and ROADM revenues increased by 44% compared to the prior quarter.

"Our third quarter results reflect the benefits accruing from solid execution of the growth initiatives we have focused on for fiscal 2008, including customer diversification and expanding our product portfolio and production capacity to address high-growth segments of the optical communications market," commented Eitan Gertel, Chairman and CEO of Optium Corporation. "Our execution in the third quarter continued to build on these growth initiatives. For example, during the third quarter, we passed our WSS ROADM capacity target of 1,000 units per quarter while continuing to expand our breadth of ROADM offerings, such as our high resolution 50GHz ROADM platform. We continue to expand overall WSS ROADM capacity. In 40Gb/s, we took advantage of being first to market with volumes of our DPSK 300pin module for line side applications, with total 40Gb/s revenues reaching 5% of revenues in the quarter."

In accordance with U.S. generally accepted accounting principles (GAAP), net loss in the third quarter of fiscal 2008 was $(0.7) million, or $(0.03) per share, compared to a net loss of $(0.8) million, or $(0.03) per share, in the prior quarter. Compared to $3.4 million, or $0.13 per diluted share for the same period in the prior year, net income in the third quarter declined primarily as a result of operational expenditures related to the accelerated ramp of Optium's 40Gb/s and ROADM product lines and production capacity in anticipation of future sales, higher levels of stock-based compensation, as well as $614,000 of expenses related to the proposed merger transaction with Finisar Corporation.

Non-GAAP net income for the third quarter of fiscal 2008 was $1.7 million, or $0.07 per diluted share, compared to $1.7 million, or $0.07 per diluted share, in the prior quarter. Note: In evaluating the operating performance of its business, management utilizes non-GAAP financial measures that exclude certain charges and credits required by GAAP that are considered by management to be outside Optium's core operating results. See Appendix A and the non-GAAP reconciliation table below for more information.

Non-GAAP net income for the same period in the prior year was $4.6 million, or $0.17 per diluted share. The decrease in non-GAAP net income from the prior year largely reflects the operational expenditures Optium has made to diversify its product portfolio with the addition of products and capacity expansion targeted at the high-growth 40Gb/s and ROADM markets. Revenues from ROADMs and 40Gb/s products represented 24% of total third quarter revenues, compared to 18% in the prior quarter and 3% for the same period a year ago.

"For the fourth quarter, we expect revenues to be in the range of $47-$49 million driven by continued execution and solid growth trends in the optical communications sector," stated Gertel. "In addition, with a significant portion of our new product line investments well underway, we are more focused than ever on demonstrating continued improvement in profitability.

"During the fourth quarter, we will also be working diligently toward regulatory and shareholder approval of our proposed combination with Finisar Corporation (Nasdaq: FNSR) through an all-stock merger. We currently anticipate closing the transaction during the third calendar quarter," concluded Gertel.

Conference Call Information

The Company will host a conference call to discuss its financial performance and further information regarding its projected results for fiscal 2008 following this release on Thursday, June 5, 2008 at 4:30 p.m. eastern. The dial-in number is (877) 440-5791. A webcast of the call, both live and archived, will also be available through the investor relations section of Optium's website at http://ir.optium.com. A replay of the call will be available through midnight on June 12, 2008 and can be accessed by dialing (719) 457-0820 or (888) 203-1112, access code 1774532.

Optium is a leading designer and manufacturer of high-performance optical subsystems supporting core to the edge applications for use in telecommunications and cable TV network systems. Optium's broad suite of optical transport solutions features fixed and wavelength agile 10Gb/s and 40Gb/s transceivers and subsystems, 10Gb/s pluggable transceivers, cable TV trunking and distribution subsystems and Optium's next generation WSS ROADM product line. Quoted on the NASDAQ Global Market under the symbol "OPTM," Optium is headquartered in Horsham, Pennsylvania and has offices in Sydney, Australia and Nes Ziona, Israel. For more information, visit http://www.optium.com.

Certain statements made in this press release that are not based on historical information are forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. This press release contains express or implied forward-looking statements relating to, among other things, business outlook of Optium Corporation (the "Company"). These statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond the Company's control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. In particular, the risks and uncertainties include, among other things: risks associated with completion of the pending combination of Optium and Finisar, and if it is consummated, with the operation of the combined company; risks associated with our revenue and other financial forecasts, which may differ materially from our actual results; risks associated with the Company's dependence on a limited number of customers for a significant percentage of its revenues; risks associated with demand patterns from specific customers and for specific products, including higher-end 10Gb/s products and cable TV products; risks associated with the Company's ability to sell a sufficient number of ROADMs to realize the operational benefits expected from the Company's acquisition of LCoS IP assets;; risks associated with changes in the demand for the Company's products and/or aggressive competition, which may force the Company to reduce prices; risks associated with the development and acceptance of new products and product features; risks associated with dependence on a limited number of component suppliers and/or increased demand for components, which could lead to shortages that could disrupt or delay company shipments; risks associated with making significant investments in the expansion of the business and with increased operating and capital expenditures ahead of anticipated revenues; risks associated with the Company's products being dependent upon the ability to anticipate and quickly respond to evolving technologies and customer requirements; risk associated with our foreign operations, including foreign currency exchange risks; risks associated with becoming subject to defending and resolving allegations or claims of infringement of intellectual property rights; risks associated with others infringing on the Company's intellectual property rights; risks associated with the Company's ability to retain existing personnel and recruit and retain qualified personnel; risks associated with rapidly changing technology and the ability of the Company to introduce new products on a timely and cost-effective basis; risks associated with changes in the competitive or regulatory environment in which the Company operates; and other risks. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Optium Corporation undertakes no obligation to update or revise its forward looking statements contained in this press release, whether as a result of new information, future events or circumstances or otherwise. For additional disclosure regarding these and other risks faced by Optium Corporation, see the disclosure contained in Optium Corporation's public filings with the Securities and Exchange Commission, including the risk factors included in Optium Corporation's Quarterly Report on Form 10-Q, filed March 13, 2008. All filings are available through the SEC's website at www.sec.gov or from Optium Corporation's web site at www.optium.com.

Important Additional Information

In connection with the proposed combination of Finisar Corporation ("Finisar") and Optium announced on May 16, 2008, Finisar plans to file with the Securities and Exchange Commission (the "SEC") a Registration Statement on Form S-4 containing a Joint Proxy Statement/Prospectus and Optium plans to file with the SEC the same Joint Proxy Statement/Prospectus. The definitive Joint Proxy Statement/Prospectus will be mailed to the stockholders of Finisar and Optium after clearance with the SEC. Each company will also file with the SEC from time to time other documents relating to the proposed combination. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ CAREFULLY THE JOINT PROXY STATEMENT/PROSPECTUS WHEN IT IS FILED WITH THE SEC, AND OTHER DOCUMENTS FILED BY EITHER FINISAR OR OPTIUM WITH THE SEC RELATING TO THE PROPOSED COMBINATION WHEN THEY ARE FILED, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED COMBINATION.

Copies of the documents filed with the SEC by Finisar or Optium may be obtained free of charge from the SEC website maintained at www.sec.gov. In addition, Finisar's SEC filings may be obtained free of charge from Finisar's website (www.finisar.com) or by calling Finisar's Investor Relations department at 408-542-5050 and Optium's filings may be obtained free of charge from Optium's website (www.optium.com) or by calling Optium's Investor Relations department at 267-803-3801.

Each of Finisar and Optium, and its respective directors and executive officers, may be deemed to be participants in the solicitation of proxies from that company's respective stockholders in connection with the proposed combination. Information about the directors and executive officers of Finisar (including their respective ownership of Finisar shares) is contained in Finisar's annual meeting proxy statement filed with the SEC on February 21, 2008 and available free of charge in the manner described above. Information about the directors and executive officers of Optium (including their respective ownership of Optium shares) is contained in Optium's annual meeting proxy statement filed with the SEC on November 13, 2007 and available free of charge in the manner described above. Additional information regarding the interests of such participants in the proposed combination will be included in the Joint Proxy Statement/Prospects and the other documents filed by each company with the SEC relating to the proposed combination (when filed).



 Optium Third Quarter Fiscal Year 2008 Results:
 Consolidated Statement of Operations, GAAP Basis
 (in thousands, except per share amounts):

                                          (unaudited)
                       ------------------------------------------------
                           Three months ended         Nine months ended
                       ---------------------------   ------------------
                       May 3,    Feb. 2,  April 28,   May 3,  April 28,
                        2008      2008       2007      2008      2007
                       -------   -------   -------   --------   -------
 Revenues              $45,004   $40,294   $34,547   $121,418   $98,696
 Cost of revenues       33,077    29,413    25,190     88,941    70,709
                       -------   -------   -------   --------   -------
 Gross profit           11,927    10,881     9,357     32,477    27,987

 Operating expenses:
  Research and product
   development           6,149     5,995     3,379     17,181     9,888
  Selling, general and
   administrative        7,059     6,231     3,711     19,641     9,897
                       -------   -------   -------   --------   -------
 Total operating
  expenses              13,208    12,226     7,090     36,822    19,785
                       -------   -------   -------   --------   -------
 Income (loss) from
  operations            (1,281)   (1,345)    2,267     (4,345)    8,202
 Interest and other
  income (expense), net    402       614     1,333      1,721     2,491
                       -------   -------   -------   --------   -------
 Income (loss) before
  income tax              (879)     (731)    3,600     (2,624)   10,693
 Income tax (benefit)
  provision               (217)       69       182        (83)      654
                       -------   -------   -------   --------   -------
 Net income (loss)     $  (662)  $  (800)  $ 3,418   $ (2,541)  $10,039
                       =======   =======   =======   ========   =======

 Net income (loss)
  per share:
 Basic                 $ (0.03)  $ (0.03)  $  0.13   $  (0.10)  $  0.57
                       =======   =======   =======   ========   =======
 Diluted               $ (0.03)  $ (0.03)  $  0.13   $  (0.10)  $  0.41
                       =======   =======   =======   ========   =======
 Weighted average shares
  outstanding:
   Basic                25,499    25,452    25,350     25,461    17,576
                       =======   =======   =======   ========   =======
   Diluted              25,499    25,452    26,647     25,461    24,639
                       =======   =======   =======   ========   =======

Use of Non-GAAP Financial Measures

In evaluating the operating performance of its business, Optium's management utilizes non-GAAP financial measures that exclude certain charges and credits that are required by GAAP. These items, which are identified in the table below, share one or more of the following characteristics: they are unusual and Optium does not expect them to recur in the ordinary course of its business; they do not involve the expenditure of cash; or they are unrelated to the ongoing operation of the business in the ordinary course. The Company believes these non-GAAP financial measures are useful indications of the Company's baseline operating performance before gains, losses or other charges that are considered by management to be outside of the Company's core operating results. A reconciliation of each of the non-GAAP financial measures to the nearest GAAP financial measure is set forth in the table below.

Please see Appendix A for additional information about this table.



 Reconciliation of GAAP and Non-GAAP Financial Measures
 (in thousands, except per share data)

                                         (unaudited)
                       -----------------------------------------------
                           Three months ended        Nine months ended
                       ---------------------------   -----------------
                        May 3,   Feb. 2,   April 28,  May 3,  April 28,
                         2008      2008      2007     2008       2007
                       -------   -------   -------   -------   -------
 Reconciliation of GAAP
  to non-GAAP gross
  profit:
 GAAP gross profit     $11,927   $10,881   $ 9,357   $32,477   $27,987
 GAAP gross profit
  margin                  26.5%     27.0%     27.1%     26.7%     28.4%
 Non-GAAP adjustments
  to gross profit:
 Cost of revenues:
   Stock-based
    compensation (a)        52        84        23       196        34
                       -------   -------   -------   -------   -------
 Total non-GAAP
  adjustments to
  gross profit              52        84        23       196        34
                       -------   -------   -------   -------   -------
 Non-GAAP gross profit $11,979   $10,965   $ 9,380   $32,673   $28,021
                       =======   =======   =======   =======   =======
 Non-GAAP gross profit
  margin                  26.6%     27.2%     27.2%     26.9%     28.4%
                       =======   =======   =======   =======   =======

 Reconciliation of GAAP
  to non-GAAP net income
  (loss) and non-GAAP
  net income (loss) per
  share:
 GAAP net income
  (loss)               $  (662)  $  (800)  $ 3,418   $(2,541)  $10,039
 Cost of revenues:
   Stock-based
    compensation (a)        52        84        23       196        34
 Operating expenses:
  Research and product
   development
    Stock-based
     compensation (a)      343       492        69     1,197        93
  Selling, general and
   administrative
    Amortization of
     purchased
     intangibles           101       101        --       303        --
    Duplicate facility
     costs during
     facility move         103        65       171       168       610
    Merger transaction
     expenses              614        --        --       614        --
    Patent litigation
     expenses              614       774       614     3,387       933
    Stock-based
     compensation (a)      841     1,009       325     2,494       722
 Deferred tax adjustment  (227)       32        --      (160)       --
 Income tax provision on
  non-GAAP adjustments     (81)      (53)      (60)     (204)     (117)
                       -------   -------   -------   -------   -------
 Non-GAAP net income
  (loss)               $ 1,698   $ 1,704   $ 4,560   $ 5,454   $12,314
                       =======   =======   =======   =======   =======
 GAAP net income (loss)
  per share:
 Basic                 $ (0.03)  $ (0.03)  $  0.13   $ (0.10)  $  0.57
                       =======   =======   =======   =======   =======
 Diluted               $ (0.03)  $ (0.03)  $  0.13   $ (0.10)  $  0.41
                       =======   =======   =======   =======   =======

 Shares used in computing
  GAAP net income (loss)
  per share:
 Basic                  25,499    25,452    25,350    25,461    17,576
                       =======   =======   =======   =======   =======
 Diluted                25,499    25,452    26,647    25,461    24,639
                       =======   =======   =======   =======   =======
 Non-GAAP net income
  (loss) per share:
 Basic                 $  0.07   $  0.07   $  0.18   $  0.21   $  0.70
                       =======   =======   =======   =======   =======
 Diluted               $  0.07   $  0.07   $  0.17   $  0.21   $  0.50
                       =======   =======   =======   =======   =======

 Shares used in computing
  non-GAAP net income
  (loss) per share:
 Basic                  25,499    25,452    25,350    25,461    17,576
                       =======   =======   =======   =======   =======
 Diluted                26,108    26,178    26,647    26,053    24,639
                       =======   =======   =======   =======   =======

 (a) Of the aggregate $1,236, $1,585 and $3,886 in stock-based
     compensation expense for the three months ended May 3, 2008,
     February 2, 2008 and the nine months ended May 3, 2008, 
     respectively, $105, $232 and $429, respectively, relates to 
     stock-based compensation expense resulting from one-year 
     restricted stock unit grants made in satisfaction of certain 
     bonus payments under the Company's employee and executive bonus 
     plans.


                 Condensed Consolidated Balance Sheets
                            (in thousands)
                                                   May 3,     July 28,
                                                    2008        2007
                                                  --------------------
                                                (unaudited)
 Assets
 ------
 Current assets:
      Cash and cash equivalents                   $ 42,614    $ 25,359
      Short-term investments                         3,600      36,018
      Accounts receivable, net                      32,758      21,853
      Inventories, net                              27,699      20,684
      Restricted cash                                  415          68
      Deferred tax asset, current portion            6,219       4,976
      Prepaid expenses and other current assets      1,941       1,039
                                                  --------    --------
 Total current assets                              115,246     109,997

 Property and equipment, net                        16,164       9,124
 Goodwill                                           38,993      37,923
 Deferred tax asset, non-current portion             7,776       8,881
 Intangible assets, net                              1,705       2,006
 Other assets                                          612         170
                                                  --------    --------
 Total assets                                     $180,496    $168,101
                                                  ========    ========
 Liabilities and stockholders' equity
 ------------------------------------
 Current liabilities:
      Accounts payable                            $ 28,768    $ 20,222
      Accrued expenses                               5,155       4,389
      Accrued warranty                                 385         359
      Current portion of debt                           31          46
                                                  --------    --------
 Total current liabilities                          34,339      25,016
      Long-term debt, net of current portion            --          17
      Other long-term liabilities                      404         189
                                                  --------    --------
 Total liabilities                                  34,743      25,222
                                                  --------    --------
 Stockholders' equity:
      Common stock                                       3           3
      Additional paid-in capital-common stock      194,634     191,118
      Deferred compensation                           (549)       (924)
      Treasury stock                                (2,762)     (2,762)
      Accumulated deficit                          (49,032)    (46,395)
      Accumulated other comprehensive income         3,459       1,839
                                                  --------    --------
 Total stockholders' equity                        145,753     142,879
                                                  --------    --------
 Total liabilities and stockholders' equity       $180,496    $168,101
                                                  ========    ========

                 Consolidated Statements of Cash Flows
                            (in thousands)
                                                   Nine Months Ended
                                                  May 3,     April 30,
                                                   2008        2007
                                                 --------------------
                                                      (unaudited)
 Cash flows from operating activities:
 Net income (loss)                               $ (2,541)   $ 10,039
 Adjustments to reconcile net income
  (loss) to net cash used in operating
  activities:
   Depreciation and amortization                    3,379       1,969
   Stock-based compensation                         3,615         881
   Provision for doubtful accounts                     23          11
   Loss on disposal of property and equipment           4           9
   Change in deferred taxes                          (103)         --
  Changes in operating assets and liabilities:
   Accounts receivable                            (10,987)     (7,787)
   Inventories, net                                (6,794)     (5,133)
   Prepaid expenses and other current assets         (933)     (1,065)
   Other assets                                      (475)       (180)
   Accounts payable                                 8,366       3,369
   Accrued expenses                                   896         343
   Other current liabilities                           --      (2,640)
   Warranty liabilities                                24          82
   Other long-term liabilities                         64          92
                                                 --------------------
 Net cash used in operating activities           $ (5,462)   $    (10)
                                                 --------------------
 Cash flows from investing activities:
  Purchase of property and equipment               (9,542)     (3,964)
  Proceeds from sale of property
   and equipment                                       --          30
  Release of restricted cash                         (167)         --
  Purchases of marketable securities              (57,557)    (45,562)
  Maturities and sales of marketable
   securities                                      89,975      22,384
                                                 --------------------
 Net cash provided by (used in)
  investing activities                           $ 22,709    $(27,112)
                                                 --------------------
 Cash flows from financing activities:
  Payments on line of credit                          (32)       (671)
  Net proceeds from initial public
   offering                                            --      95,378
  Proceeds from exercise of employee
   stock options                                       28          47
                                                 --------------------
 Net cash (used in) provided by
  financing activities                           $     (4)   $ 94,754
                                                 --------------------
 Effect of exchange rate changes on
  cash and cash equivalents                            12          33

 Net increase in cash and cash
  equivalents                                      17,255      67,665
 Cash and cash equivalents, beginning
  of period                                        25,359      10,377
                                                 --------------------
 Cash and cash equivalents,
  end of period                                  $ 42,614    $ 78,042
                                                 ====================

Appendix A

In calculating the non-GAAP financial measures contained elsewhere in this release, the Company adjusted its GAAP results to exclude certain charges and credits that are required by GAAP as follows:



   *   Stock-based compensation expense -- The Company incurs
       stock-based compensation expense with respect to equity
       incentive awards made to employees, directors and other service
       providers, including (a) long-term equity incentive awards made
       to new hires and existing employees and (b) equity incentive
       awards made in satisfaction of certain bonus payments as earned
       under the Company's executive and employee bonus plans, which
       can be satisfied with equity incentive awards or cash at the
       option of the Company.

   *   Amortization of purchased intangibles -- The Company purchased
       intangible technology assets from Microdisplay Corporation in
       July 2007 and is amortizing the purchase price of these
       purchased intangibles over a five year useful life.

   *   Duplicate facility costs during facility move -- The Company has
       incurred duplicate facility costs during facility move as a
       result of (a) the execution of a lease for its current U.S.
       operating facility and the early termination of the lease for
       its prior U.S. operating facility and (b) the execution of a
       lease for its future Australian operating facility. The Company
       completed the U.S. facility relocation during the third quarter
       of fiscal 2007 and expects to complete the Australian facility
       relocation during calendar 2008.

   *   Merger transaction expenses -- The Company has incurred
       expenses in connection with its proposed merger transaction
       with Finisar Corporation announced May 16, 2008. These expenses
       have included legal fees and expenses, accounting due diligence
       fees and expenses, and travel and related expenses.

   *   Patent litigation expenses -- Since the first quarter of
       fiscal 2007, the Company has incurred expenses in connection
       with the defense of patent infringement lawsuits brought
       against Optium with respect to certain of Optium's cable TV
       products.

   *   Deferred tax adjustment -- The Company recognized a tax benefit
       in July 2007 as the result of removal of valuation allowances
       associated with NOLs and other credits in the United States and,
       as a result, will incur non-cash tax expense in certain future
       taxable periods.

While non-GAAP financial measures are not calculated in accordance with GAAP or alternatives for measures calculated in accordance with GAAP, the Company believes that providing this information to investors, in addition to GAAP measures, allows investors to better evaluate its current core operating performance relative to prior periods and its financial results in comparison to its competitors. However, non-GAAP financial measures:



   *   are not measures of financial performance calculated in
       accordance with GAAP;
   *   do not represent financial measures as defined by GAAP; and,
   *   should not be considered as an alternative to financial
       measures prepared in conformity with GAAP.

Further, the Company's non-GAAP financial measures as calculated may not be necessarily comparable to similarly titled measures reported by other companies.

Optm-F


            

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