----

----

| R      | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934   |
|--------|------------------------------------------------------------------------------------------|
|   |                                                                                     |
|   | For the quarterly period ended January 2, 2011                                           |
|   |                                                                                     |
|   | or                                                                                       |
|   |                                                                                     |
| £ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|   |                                                                                     |
|   | For the transition period from __________ to __________                                  |

| Delaware(State or other jurisdiction ofincorporation or organization) | No. 77-0411346(I.R.S. EmployerIdentification No.) |
|-----------------------------------------------------------------------|---------------------------------------------------|

| Large accelerated filer  £ |   | Accelerated filer R |   | Non-accelerated filer £ |   | Smaller reporting company £ |
|--------------------------------------|--------|--------------------------|--------|-----------------------------------|--------|---------------------------------------|

----

----

Table of Contents

|                                |
|-------------------------------------|
| TABLE OF CONTENTS                   |
|                                |   |   |
|                                |   | Page |
| PART I. FINANCIAL INFORMATION  |   |
| Item 1.                             | Financial Statements (unaudited):  |   |
|                                | Condensed Consolidated Balance Sheets – December 31, 2010 and June 30, 2010  | 3 |
|                                | Condensed Consolidated Statements of Operations – Three and six months ended December 31, 2010 and 2009  | 4 |
|                                | Condensed Consolidated Statements of Cash Flows – Six months ended December 31, 2010 and 2009  | 5 |
|                                | Notes to Condensed Consolidated Financial Statements  | 6 |
| Item 2.                             | Management’s Discussion and Analysis of Financial Condition and Results of Operations  | 22 |
| Item 3.                             | Quantitative and Qualitative Disclosures About Market Risk  | 30 |
| Item 4.                             | Controls and Procedures  | 31 |
| PART II. OTHER INFORMATION     |
| Item 1.                             | Legal Proceedings  | 31 |
| Item 1A.                            | Risk Factors  | 31 |
| Item 2.                             | Unregistered Sales of Equity Securities and Use of Proceeds  | 33 |
| Item 3.                             | Defaults Upon Senior Securities  | 33 |
| Item 4.                             | (Removed and Reserved)  | 33 |
| Item 5.                             | Other Information  | 33 |
| Item 6.                             | Exhibits  | 34 |
| SIGNATURES                          | 35 |
|   EX-31.1                 |   |
|   EX-31.2                 |   |
|   EX-32.1                 |   |
|   EX-32.2                 |   |
|   EX-10.12                     |   |
|   EX-10.13                     |   |

----

Table of Contents

PART I

ITEM 1 - FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED BALANCE SHEETS

|                                                                                           |   | December 31,                |     |   | June 30, |   |
|------------------------------------------------------------------------------------------------|--------|-----------------------------|----------|--------|----------|--------|
|                                                                                           |   | 2010                        |     |   | 2010 (1) |   |
|                                                                                           |   | (In thousands, except share |     |
|                                                                                           |   | and per share data)         |     |
| ASSETS                                                                                         |   |                        |     |   |     |   |
| Current assets:                                                                                |   |                        |     |   |     |   |
| Cash and cash equivalents                                                                      |   | $                           | 68,713   |   |     | $      | 40,711 |   |
| Short-term investments                                                                         |   |                        | 99,295   |   |     |   | 109,632 |   |
| Accounts receivable, net                                                                       |   |                        | 39,833   |   |     |   | 29,728 |   |
| Inventories                                                                                    |   |                        | 26,007   |   |     |   | 20,902 |   |
| Prepaid expenses and other current assets                                                      |   |                        | 5,983    |   |     |   | 7,659 |   |
| Total current assets                                                                           |   |                        | 239,831  |   |     |   | 208,632 |   |
| Long-term investments                                                                          |   |                        | -        |   |     |   | 10,000 |   |
| Property, plant and equipment, net                                                             |   |                        | 35,342   |   |     |   | 33,363 |   |
| Goodwill and intangible assets, net                                                            |   |                        | 4,900    |   |     |   | 6,952 |   |
| Other assets                                                                                   |   |                        | 675      |   |     |   | 651 |   |
| Total assets                                                                                   |   | $                           | 280,748  |   |     | $      | 259,598 |   |
|                                                                                           |   |                        |     |   |     |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                           |   |                        |     |   |     |   |   |   |
| Current liabilities:                                                                           |   |                        |     |   |     |   |   |   |
| Accounts payable                                                                               |   | $                           | 13,774   |   |     | $      | 14,369 |   |
| Accrued liabilities                                                                            |   |                        | 11,818   |   |     |   | 11,536 |   |
| Deferred revenues                                                                              |   |                        | 1,213    |   |     |   | - |   |
| Income taxes payable                                                                           |   |                        | 976      |   |     |   | 121 |   |
| Total current liabilities                                                                      |   |                        | 27,781   |   |     |   | 26,026 |   |
| Income taxes payable, non-current                                                              |   |                        | 3,999    |   |     |   | 3,415 |   |
| Other non-current liabilities                                                                  |   |                        | 1,625    |   |     |   | 1,508 |   |
| Total liabilities                                                                              |   |                        | 33,405   |   |     |   | 30,949 |   |
|                                                                                           |   |                        |     |   |     |   |   |   |
| Commitments and contingencies (Note 16)                                                   |   |                        |     |   |     |   |   |   |
|                                                                                           |   |                        |     |   |     |   |   |   |
| Stockholders' equity:                                                                          |   |                        |     |   |     |   |   |   |
| Common stock, $0.001 par value, 34,000,000 shares authorized; 19,620,129 and 19,582,471 shares |   |                        |     |   |     |   |   |   |
| issued and outstanding as of December 31, 2010 and June 30, 2010, respectively                 |   |                        | 20       |   |     |   | 20 |   |
| Additional paid-in capital                                                                     |   |                        | 445,033  |   |     |   | 443,825 |   |
| Treasury stock, at cost (82,514 shares as of June 30, 2010)                                    |   |                        | -        |   |     |   | (1,196 | ) |
| Accumulated other comprehensive income                                                         |   |                        | 10,465   |   |     |   | 8,243 |   |
| Accumulated deficit                                                                            |   |                        | (208,175 | )      |     |   | (222,243 | ) |
| Total stockholders’ equity                                                               |   |                        | 247,343  |   |     |   | 228,649 |   |
| Total liabilities and stockholders' equity                                                     |   | $                           | 280,748  |   |     | $      | 259,598 |   |

| (1)   | The condensed consolidated balance sheet at June 30, 2010 has been derived from the audited consolidated financial statements at that date. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

|                                     |   | Three Months Ended                    |   |   | Six Months Ended |   |
|------------------------------------------|--------|---------------------------------------|--------|--------|------------------|--------|
|                                     |   | December 31,                          |   |   | December 31,     |   |
|                                     |   | 2010                                  |   |   | 2009             |   |   | 2010 |   |   | 2009 |   |
|                                     |   | (In thousands, except per share data) |   |
|                                     |   |                                  |   |   |             |   |   |   |   |   |   |   |
| Revenues                                 |   | $                                     | 52,025 |   |             | $      | 32,743 |   |   | $ | 101,665 |   |   | $ | 66,308 |   |
| Cost of revenues:                        |   |                                  |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Cost of revenues                         |   |                                  | 32,814 |   |             |   | 21,643 |   |   |   | 66,216 |   |   |   | 45,277 |   |
| Stock-based compensation expense         |   |                                  | 102    |   |             |   | 88 |   |   |   | 219 |   |   |   | 187 |   |
| Total cost of revenues                   |   |                                  | 32,916 |   |             |   | 21,731 |   |   |   | 66,435 |   |   |   | 45,464 |   |
|                                     |   |                                  |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit                             |   |                                  | 19,109 |   |             |   | 11,012 |   |   |   | 35,230 |   |   |   | 20,844 |   |
|                                     |   |                                  |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                      |   |                                  |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Research and development:                |   |                                  |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Research and development                 |   |                                  | 3,992  |   |             |   | 2,268 |   |   |   | 7,391 |   |   |   | 4,493 |   |
| Stock-based compensation expense         |   |                                  | 315    |   |             |   | 245 |   |   |   | 649 |   |   |   | 514 |   |
| Total research and development           |   |                                  | 4,307  |   |             |   | 2,513 |   |   |   | 8,040 |   |   |   | 5,007 |   |
|                                     |   |                                  |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Sales and marketing:                     |   |                                  |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Sales and marketing                      |   |                                  | 2,482  |   |             |   | 1,923 |   |   |   | 4,940 |   |   |   | 4,009 |   |
| Stock-based compensation expense         |   |                                  | 442    |   |             |   | 361 |   |   |   | 871 |   |   |   | 689 |   |
| Total sales and marketing                |   |                                  | 2,924  |   |             |   | 2,284 |   |   |   | 5,811 |   |   |   | 4,698 |   |
|                                     |   |                                  |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| General and administrative:              |   |                                  |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| General and administrative               |   |                                  | 1,895  |   |             |   | 1,810 |   |   |   | 3,763 |   |   |   | 3,531 |   |
| Stock-based compensation expense         |   |                                  | 370    |   |             |   | 914 |   |   |   | 1,148 |   |   |   | 1,864 |   |
| Total general and administrative         |   |                                  | 2,265  |   |             |   | 2,724 |   |   |   | 4,911 |   |   |   | 5,395 |   |
|                                     |   |                                  |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Amortization of intangible assets        |   |                                  | 451    |   |             |   | 403 |   |   |   | 902 |   |   |   | 807 |   |
| Total operating expenses                 |   |                                  | 9,947  |   |             |   | 7,924 |   |   |   | 19,664 |   |   |   | 15,907 |   |
|                                     |   |                                  |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Income from operations                   |   |                                  | 9,162  |   |             |   | 3,088 |   |   |   | 15,566 |   |   |   | 4,937 |   |
| Interest and other income, net           |   |                                  | 54     |   |             |   | 193 |   |   |   | 111 |   |   |   | 467 |   |
| Gain on sale or disposal of assets       |   |                                  | 83     |   |             |   | 214 |   |   |   | 83 |   |   |   | 338 |   |
| Income before provision for income taxes |   |                                  | 9,299  |   |             |   | 3,495 |   |   |   | 15,760 |   |   |   | 5,742 |   |
| Provision for income taxes               |   |                                  | (811   | )      |             |   | (358 | ) |   |   | (1,692 | ) |   |   | (796 | ) |
| Net income                               |   | $                                     | 8,488  |   |             | $      | 3,137 |   |   | $ | 14,068 |   |   | $ | 4,946 |   |
|                                     |   |                                  |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Net income per share:                    |   |                                  |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                    |   | $                                     | 0.43   |   |             | $      | 0.15 |   |   | $ | 0.72 |   |   | $ | 0.24 |   |
|    Diluted                     |   | $                                     | 0.41   |   |             | $      | 0.14 |   |   | $ | 0.69 |   |   | $ | 0.23 |   |
|                                     |   |                                  |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Shares used in per share calculation:    |   |                                  |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                    |   |                                  | 19,556 |   |             |   | 20,797 |   |   |   | 19,441 |   |   |   | 20,686 |   |
|    Diluted                     |   |                                  | 20,602 |   |             |   | 21,694 |   |   |   | 20,463 |   |   |   | 21,452 |   |

----

Table of Contents

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                              |   | Six Months Ended |    |
|-----------------------------------------------------------------------------------|--------|------------------|---------|
|                                                                              |   | December 31,     |    |
|                                                                              |   | 2010             |    |   | 2009 |   |
|                                                                              |   | (In thousands)   |    |
| Cash flows from operating activities:                                             |   |             |    |   |   |   |
| Net income                                                                        |   | $                | 14,068  |   |   | $ | 4,946 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |             |    |   |   |   |   |   |
| Depreciation and amortization of property, plant and equipment                    |   |             | 2,709   |   |   |   | 3,341 |   |
| Amortization of intangible assets                                                 |   |             | 2,052   |   |   |   | 1,891 |   |
| Stock-based compensation expense                                                  |   |             | 2,887   |   |   |   | 3,254 |   |
| Amortization of premium on investments                                            |   |             | 236     |   |   |   | 131 |   |
| Gain on sale or disposal of assets                                                |   |             | (83     | ) |   |   | (338 | ) |
| Other                                                                             |   |             | 239     |   |   |   | (18 | ) |
| Change in assets and liabilities:                                                 |   |             |    |   |   |   |   |   |
| Accounts receivable, net                                                          |   |             | (9,767  | ) |   |   | 3,654 |   |
| Inventories                                                                       |   |             | (4,346  | ) |   |   | (286 | ) |
| Prepaid expenses and other current assets                                         |   |             | 1,788   |   |   |   | (1,333 | ) |
| Other assets                                                                      |   |             | 4       |   |   |   | 14 |   |
| Accounts payable                                                                  |   |             | (58     | ) |   |   | 2,037 |   |
| Accrued liabilities and other liabilities                                         |   |             | 3,240   |   |   |   | 317 |   |
| Net cash provided by operating activities                                         |   |             | 12,969  |   |   |   | 17,610 |   |
|                                                                              |   |             |    |   |   |   |   |   |
| Cash flows from investing activities:                                             |   |             |    |   |   |   |   |   |
| Purchases of available-for-sale investments                                       |   |             | (70,370 | ) |   |   | (106,834 | ) |
| Maturities of available-for-sale investments                                      |   |             | 80,678  |   |   |   | 99,762 |   |
| Purchases of held-to-maturity investments                                         |   |             | -       |   |   |   | (10,000 | ) |
| Maturities of held-to-maturity investments                                        |   |             | 10,000  |   |   |   | 5,000 |   |
| Proceeds from sales of property, plant and equipment                              |   |             | 183     |   |   |   | 278 |   |
| Purchases of property, plant and equipment                                        |   |             | (3,985  | ) |   |   | (1,129 | ) |
| Net cash provided by (used in) investing activities                               |   |             | 16,506  |   |   |   | (12,923 | ) |
|                                                                              |   |             |    |   |   |   |   |   |
| Cash flows from financing activities:                                             |   |             |    |   |   |   |   |   |
| Proceeds from issuance of common stock                                            |   |             | 4,855   |   |   |   | 3,406 |   |
| Repurchases of common stock                                                       |   |             | (6,534  | ) |   |   | - |   |
| Net cash (used in) provided by financing activities                               |   |             | (1,679  | ) |   |   | 3,406 |   |
|                                                                              |   |             |    |   |   |   |   |   |
| Effect of exchange rate changes on cash and cash equivalents                      |   |             | 206     |   |   |   | 20 |   |
| Net increase in cash and cash equivalents                                         |   |             | 28,002  |   |   |   | 8,113 |   |
| Cash and cash equivalents, beginning of period                                    |   |             | 40,711  |   |   |   | 49,702 |   |
| Cash and cash equivalents, end of period                                          |   | $                | 68,713  |   |   | $ | 57,815 |   |

----

Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

----

Table of Contents

|                                                  |   | Three Months Ended |   |   | Six Months Ended |   |
|-------------------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                                                  |   | December 31,       |   |   | December 31,     |   |
|                                                  |   | 2010               |   |   | 2009             |   |   | 2010 |   |   | 2009 |   |
| Numerator:                                            |   |               |   |   |             |   |   |   |   |   |   |   |
| Net income                                            |   | $                  | 8,488  |   |             | $      | 3,137 |   |   | $ | 14,068 |   |   | $ | 4,946 |   |
|                                                  |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Denominator:                                          |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding - basic           |   |               | 19,556 |   |             |   | 20,797 |   |   |   | 19,441 |   |   |   | 20,686 |   |
| Effect of dilutive potential common shares            |   |               | 1,046  |   |             |   | 897 |   |   |   | 1,022 |   |   |   | 766 |   |
| Weighted average shares outstanding - diluted         |   |               | 20,602 |   |             |   | 21,694 |   |   |   | 20,463 |   |   |   | 21,452 |   |
|                                                  |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Net income per share - basic                          |   | $                  | 0.43   |   |             | $      | 0.15 |   |   | $ | 0.72 |   |   | $ | 0.24 |   |
| Net income per share - diluted                        |   | $                  | 0.41   |   |             | $      | 0.14 |   |   | $ | 0.69 |   |   | $ | 0.23 |   |
|                                                  |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Antidilutive stock options and restricted stock units |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| not included in income per share calculation          |   |               | 1,127  |   |             |   | 1,637 |   |   |   | 1,320 |   |   |   | 2,042 |   |

----

Table of Contents

|                                    |   | December 31, |   |   | June 30, |   |
|-----------------------------------------|--------|--------------|--------|--------|----------|--------|
|                                    |   | 2010         |   |   | 2010     |   |
| Accumulated other comprehensive income: |   |         |   |   |     |   |
| Cumulative translation adjustment       |   | $            | 10,444 |   |     | $      | 8,241 |   |
| Unrealized gain on investments, net     |   |         | 21     |   |     |   | 2 |   |
|                                    |   | $            | 10,465 |   |     | $      | 8,243 |   |

|                                          |   | Three Months Ended |   |   | Six Months Ended |   |
|-----------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                                          |   | December 31,       |   |   | December 31,     |   |
|                                          |   | 2010               |   |   | 2009             |   |   | 2010 |   |   | 2009 |   |
| Net income                                    |   | $                  | 8,488  |   |             | $      | 3,137 |   |   | $ | 14,068 |   |   | $ | 4,946 |   |
| Change in cumulative translation adjustment   |   |               | 1,707  |   |             |   | (27 | ) |   |   | 2,203 |   |   |   | (65 | ) |
| Change in unrealized gain on investments, net |   |               | (3     | )      |             |   | (63 | ) |   |   | 19 |   |   |   | 83 |   |
| Total comprehensive income                    |   | $                  | 10,192 |   |             | $      | 3,047 |   |   | $ | 16,290 |   |   | $ | 4,964 |   |

----

Table of Contents

|                         |   | December 31, 2010 |   |
|------------------------------|--------|-------------------|--------|
|                         |   |              |   |   |   |   |   | Gross |   |   | Gross |   |   |   |   |
|                         |   | Carrying          |   |   | Amortized |   |   | Unrealized |   |   | Unrealized |   |   | Estimated |   |
|                         |   | Value             |   |   | Cost |   |   | Gains |   |   | Losses |   |   | Fair Value |   |
| Short-term investments:      |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Certificates of deposit      |   | $                 | 8,058  |   |   | $ | 8,058 |   |   | $ | - |   |   | $ | - |   |   | $ | 8,058 |   |
| United States Treasury       |   |              | 52,948 |   |   |   | 52,926 |   |   |   | 22 |   |   |   | - |   |   |   | 52,948 |   |
| Corporate securities         |   |              | 38,289 |   |   |   | 38,290 |   |   |   | 3 |   |   |   | (4 | ) |   |   | 38,289 |   |
| Total short-term investments |   | $                 | 99,295 |   |   | $ | 99,274 |   |   | $ | 25 |   |   | $ | (4 | ) |   | $ | 99,295 |   |

|                               |   | June 30, 2010 |    |
|------------------------------------|--------|---------------|---------|
|                               |   |          |    |   |   |   |   | Gross |   |   | Gross |   |   |   |   |
|                               |   | Carrying      |    |   | Amortized |   |   | Unrealized |   |   | Unrealized |   |   | Estimated |   |
|                               |   | Value         |    |   | Cost |   |   | Gains |   |   | Losses |   |   | Fair Value |   |
| Short-term investments:            |   |          |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Certificates of deposit            |   | $             | 6,823   |   |   | $ | 6,823 |   |   | $ | - |   |   | $ | - |   |   | $ | 6,823 |   |
| United States government agencies  |   |          | 14,994  |   |   |   | 14,993 |   |   |   | 4 |   |   |   | - |   |   |   | 14,997 |   |
| United States Treasury             |   |          | 41,946  |   |   |   | 41,912 |   |   |   | 34 |   |   |   | - |   |   |   | 41,946 |   |
| Corporate securities               |   |          | 45,869  |   |   |   | 45,902 |   |   |   | - |   |   |   | (33 | ) |   |   | 45,869 |   |
|  Total short-term investments |   |          | 109,632 |   |   |   | 109,630 |   |   |   | 38 |   |   |   | (33 | ) |   |   | 109,635 |   |
|                               |   |          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term investments:             |   |          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| United States government agencies  |   |          | 10,000  |   |   |   | 10,000 |   |   |   | 2 |   |   |   | - |   |   |   | 10,002 |   |
| Total long-term investments        |   |          | 10,000  |   |   |   | 10,000 |   |   |   | 2 |   |   |   | - |   |   |   | 10,002 |   |
|                               |   |          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total investments                  |   | $             | 119,632 |   |   | $ | 119,630 |   |   | $ | 40 |   |   | $ | (33 | ) |   | $ | 119,637 |   |

|                                 |   | December 31, 2010 |   |
|--------------------------------------|--------|-------------------|--------|
|                                 |   |              |   |   | Gross |   |   | Gross |   |   |   |   |
|                                 |   | Amortized         |   |   | Unrealized |   |   | Unrealized |   |   | Estimated |   |
|                                 |   | Cost              |   |   | Gains |   |   | Losses |   |   | Fair Value |   |
| Available-for-sale investments:      |   |              |   |   |   |   |   |   |   |   |   |   |
| Certificates of deposit              |   | $                 | 8,058  |   |   | $ | - |   |   | $ | - |   |   | $ | 8,058 |   |
|  United States Treasury         |   |              | 52,926 |   |   |   | 22 |   |   |   | - |   |   |   | 52,948 |   |
|  Corporate securities           |   |              | 38,290 |   |   |   | 3 |   |   |   | (4 | ) |   |   | 38,289 |   |
| Total available-for-sale investments |   | $                 | 99,274 |   |   | $ | 25 |   |   | $ | (4 | ) |   | $ | 99,295 |   |

----

Table of Contents

|                                 |   | June 30, 2010 |    |
|--------------------------------------|--------|---------------|---------|
|                                 |   |          |    |   | Gross |   |   | Gross |   |   |   |   |
|                                 |   | Amortized     |    |   | Unrealized |   |   | Unrealized |   |   | Estimated |   |
|                                 |   | Cost          |    |   | Gains |   |   | Losses |   |   | Fair Value |   |
| Available-for-sale investments:      |   |          |    |   |   |   |   |   |   |   |   |   |
| Certificates of deposit              |   | $             | 6,823   |   |   | $ | - |   |   | $ | - |   |   | $ | 6,823 |   |
| United States government agencies    |   |          | 9,993   |   |   |   | 1 |   |   |   | - |   |   |   | 9,994 |   |
| United States Treasury               |   |          | 41,912  |   |   |   | 34 |   |   |   | - |   |   |   | 41,946 |   |
|  Corporate securities           |   |          | 42,801  |   |   |   | - |   |   |   | (33 | ) |   |   | 42,768 |   |
| Total available-for-sale investments |   |          | 101,529 |   |   |   | 35 |   |   |   | (33 | ) |   |   | 101,531 |   |
|                                 |   |          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held-to-maturity investments:        |   |          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate securities                 |   |          | 3,101   |   |   |   | - |   |   |   | - |   |   |   | 3,101 |   |
| United States government agencies    |   |          | 15,000  |   |   |   | 5 |   |   |   | - |   |   |   | 15,005 |   |
| Total held-to-maturity investments   |   |          | 18,101  |   |   |   | 5 |   |   |   | - |   |   |   | 18,106 |   |
|                                 |   |          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total investments                    |   | $             | 119,630 |   |   | $ | 40 |   |   | $ | (33 | ) |   | $ | 119,637 |   |

|                                 |   | December 31, 2010 |   |
|--------------------------------------|--------|-------------------|--------|
|                                 |   | In Loss Position  |   |
|                                 |   | < 12 months    |   |
|                                 |   |              |   |   | Gross |   |
|                                 |   | Fair              |   |   | Unrealized |   |
|                                 |   | Value             |   |   | Losses |   |
| Available-for-sale investments:      |   |              |   |   |   |   |
| Corporate securities                 |   | $                 | 9,739  |   |   | $ | (4 | ) |
| Total available-for-sale investments |   |              | 9,739  |   |   |   | (4 | ) |
|                                 |   |              |   |   |   |   |   |   |
| Total investments in loss position   |   | $                 | 9,739  |   |   | $ | (4 | ) |

----

Table of Contents

|                                 |   | December 31, 2010 |   |   | June 30, 2010 |   |
|--------------------------------------|--------|-------------------|--------|--------|---------------|--------|
|                                 |   | Amortized         |   |   | Estimated     |   |   | Amortized |   |   | Estimated |   |
|                                 |   | Cost              |   |   | Fair Value    |   |   | Cost |   |   | Fair Value |   |
| Available-for-sale investments:      |   |              |   |   |          |   |   |   |   |   |   |   |
| Due in one year or less              |   | $                 | 99,274 |   |          | $      | 99,295 |   |   | $ | 101,529 |   |   | $ | 101,531 |   |
| Total available-for-sale investments |   |              | 99,274 |   |          |   | 99,295 |   |   |   | 101,529 |   |   |   | 101,531 |   |
|                                 |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Held-to-maturity investments:        |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Due in one year or less              |   |              | -      |   |          |   | - |   |   |   | 8,101 |   |   |   | 8,101 |   |
| Due in one year to five years        |   |              | -      |   |          |   | - |   |   |   | 10,000 |   |   |   | 10,005 |   |
| Total held-to-maturity investments   |   |              | -      |   |          |   | - |   |   |   | 18,101 |   |   |   | 18,106 |   |
|                                 |   |              |   |   |          |   |   |   |   |   |   |   |   |   |   |   |
| Total investments                    |   | $                 | 99,274 |   |          | $      | 99,295 |   |   | $ | 119,630 |   |   | $ | 119,637 |   |

| ·   | Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Level 3 inputs are unobservable inputs for the asset or liability. |
|--------------------|--------------------------------------------------------------------|

----

Table of Contents

|                    |   | December 31, 2010 |   |
|-------------------------|--------|-------------------|--------|
|                    |   | Level 1           |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Financial assets        |   |              |   |   |   |   |   |   |   |   |   |   |
| Cash equivalent:        |   |              |   |   |   |   |   |   |   |   |   |   |
| Money market funds      |   | $                 | 10,771 |   |   | $ | - |   |   | $ | - |   |   | $ | 10,771 |   |
| Corporate securities    |   |              | -      |   |   |   | 29,447 |   |   |   | - |   |   |   | 29,447 |   |
| Short-term investments: |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Certificates of deposit |   |              | -      |   |   |   | 8,058 |   |   |   | - |   |   |   | 8,058 |   |
| United States Treasury  |   |              | -      |   |   |   | 52,948 |   |   |   | - |   |   |   | 52,948 |   |
| Corporate securities    |   |              | -      |   |   |   | 38,289 |   |   |   | - |   |   |   | 38,289 |   |
| Total financial assets  |   | $                 | 10,771 |   |   | $ | 128,742 |   |   | $ | - |   |   | $ | 139,513 |   |
|                    |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Financial liabilities   |   | $                 | -      |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |

|                                      |   | June 30, 2010 |   |
|-------------------------------------------|--------|---------------|--------|
|                                      |   | Level 1       |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Financial assets                          |   |          |   |   |   |   |   |   |   |   |   |   |
| Cash equivalents:                         |   |          |   |   |   |   |   |   |   |   |   |   |
| Money market funds                        |   | $             | 10,182 |   |   | $ | - |   |   | $ | - |   |   | $ | 10,182 |   |
| Corporate securities                      |   |          | -      |   |   |   | 8,000 |   |   |   | - |   |   |   | 8,000 |   |
| Short-term investments:                   |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Certificates of deposit                   |   |          | -      |   |   |   | 6,823 |   |   |   | - |   |   |   | 6,823 |   |
| United States government agencies         |   |          | -      |   |   |   | 9,994 |   |   |   | - |   |   |   | 9,994 |   |
| United States Treasury                    |   |          | -      |   |   |   | 41,946 |   |   |   | - |   |   |   | 41,946 |   |
| Corporate securities                      |   |          | -      |   |   |   | 42,768 |   |   |   | - |   |   |   | 42,768 |   |
|     Total financial assets |   | $             | 10,182 |   |   | $ | 109,531 |   |   | $ | - |   |   | $ | 119,713 |   |
|                                      |   |          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Financial liabilities                     |   | $             | -      |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |

|            |   | December 31, |   |   | June 30, |   |
|-----------------|--------|--------------|--------|--------|----------|--------|
|            |   | 2010         |   |   | 2010     |   |
| Inventories:    |   |         |   |   |     |   |
| Raw materials   |   | $            | 14,533 |   |     | $      | 13,744 |   |
| Work-in-process |   |         | 8,109  |   |     |   | 7,158 |   |
| Finished goods  |   |         | 3,365  |   |     |   | - |   |
| Total           |   | $            | 26,007 |   |     | $      | 20,902 |   |

----

Table of Contents

|                   |   | Estimated   |   |   |   |   |   |         |   |   |   |   |
|------------------------|--------|-------------|--------|--------|--------|--------|--------|--------------|--------|--------|--------|--------|
|                   |   | Useful Life |   |   | Gross  |   |   | Accumulated  |   |   |   |   |
| December 31, 2010      |   | (in Years)  |   |   | Amount |   |   | Amortization |   |   | Net    |   |
| Technology             |   |        | 4-6    |   |   | $      | 9,592  |         |   | $      | 7,257  |   |   | $ | 2,335 |   |
| Customer relationships |   |        | 3-7    |   |   |   | 5,671  |         |   |   | 4,568  |   |   |   | 1,103 |   |
| Trade name             |   |        | 3-6    |   |   |   | 1,775  |         |   |   | 923    |   |   |   | 852 |   |
| Backlog                |   |        | 1      |   |   |   | 188    |         |   |   | 150    |   |   |   | 38 |   |
| Total                  |   |        |   |   |   | $      | 17,226 |         |   | $      | 12,898 |   |   | $ | 4,328 |   |

|                   |   | Estimated   |   |   |   |   |   |         |   |   |   |   |
|------------------------|--------|-------------|--------|--------|--------|--------|--------|--------------|--------|--------|--------|--------|
|                   |   | Useful Life |   |   | Gross  |   |   | Accumulated  |   |   |   |   |
| June 30, 2010          |   | (in Years)  |   |   | Amount |   |   | Amortization |   |   | Net    |   |
| Technology             |   |        | 4-6    |   |   | $      | 9,592  |         |   | $      | 6,099  |   |   | $ | 3,493 |   |
| Customer relationships |   |        | 3-7    |   |   |   | 5,671  |         |   |   | 3,882  |   |   |   | 1,789 |   |
| Trade name             |   |        | 3-6    |   |   |   | 1,775  |         |   |   | 760    |   |   |   | 1,015 |   |
| Backlog                |   |        | 1      |   |   |   | 188    |         |   |   | 105    |   |   |   | 83 |   |
| Total                  |   |        |   |   |   | $      | 17,226 |         |   | $      | 10,846 |   |   | $ | 6,380 |   |

|               |   | Three Months Ended |   |   | Six Months Ended |   |
|--------------------|--------|--------------------|--------|--------|------------------|--------|
|               |   | December 31,       |   |   | December 31,     |   |
| Reported as:       |   | 2010               |   |   | 2009             |   |   | 2010 |   |   | 2009 |   |
| Cost of revenues   |   | $                  | 575    |   |             | $      | 542 |   |   | $ | 1,150 |   |   | $ | 1,084 |   |
| Operating expenses |   |               | 451    |   |             |   | 403 |   |   |   | 902 |   |   |   | 807 |   |
| Total              |   | $                  | 1,026  |   |             | $      | 945 |   |   | $ | 2,052 |   |   | $ | 1,891 |   |

| Fiscal years ending June 30, |   | Amount |   |
|------------------------------|--------|--------|--------|
|   2011                  |   | $      | 1,951  |   |
| 2012                         |   |   | 1,309  |   |
| 2013                         |   |   | 484    |   |
| 2014                         |   |   | 247    |   |
| 2015                         |   |   | 177    |   |
| After 2015                   |   |   | 160    |   |
|                         |   | $      | 4,328  |   |

----

Table of Contents

|                                       |   | December 31, |   |   | June 30, |   |
|--------------------------------------------|--------|--------------|--------|--------|----------|--------|
|                                       |   | 2010         |   |   | 2010     |   |
| Accrued liabilities:                       |   |         |   |   |     |   |
| Payroll and related expenses               |   | $            | 5,565  |   |     | $      | 3,792 |   |
| Accrued professional fees                  |   |         | 820    |   |     |   | 1,168 |   |
| Accrued sales commission                   |   |         | 555    |   |     |   | 486 |   |
| Accrued sales return                       |   |         | 525    |   |     |   | 541 |   |
| Accrued warranty                           |   |         | 500    |   |     |   | 421 |   |
| Employee withholdings and related expenses |   |         | 402    |   |     |   | 531 |   |
| Advance deposits from customers            |   |         | 349    |   |     |   | 480 |   |
| Other                                      |   |         | 3,102  |   |     |   | 4,117 |   |
|                                       |   | $            | 11,818 |   |     | $      | 11,536 |   |

|                                             |   | Three Months Ended |   |   | Six Months Ended |   |
|--------------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                                             |   | December 31,       |   |   | December 31,     |   |
|                                             |   | 2010               |   |   | 2009             |   |   | 2010 |   |   | 2009 |   |
| Balance at the beginning of the period           |   | $                  | 500    |   |             | $      | 371 |   |   | $ | 421 |   |   | $ | 371 |   |
| Accruals for warranties issued during the period |   |               | 110    |   |             |   | 29 |   |   |   | 243 |   |   |   | 88 |   |
| Adjustments related to pre-existing warranties   |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| including expirations and changes in estimates   |   |               | 9      |   |             |   | 64 |   |   |   | 68 |   |   |   | 78 |   |
| Cost of warranty repair                          |   |               | (119   | )      |             |   | (93 | ) |   |   | (232 | ) |   |   | (166 | ) |
| Balance at the end of the period                 |   | $                  | 500    |   |             | $      | 371 |   |   | $ | 500 |   |   | $ | 371 |   |

----

Table of Contents

|                                               |   | Three Months Ended |   |   | Six Months Ended |   |
|----------------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                                               |   | December 31,       |   |   | December 31,     |   |
|                                               |   | 2010               |   |   | 2009             |   |   | 2010 |   |   | 2009 |   |
| Stock-based compensation expense by type of award: |   |               |   |   |             |   |   |   |   |   |   |   |
| Employee stock options                             |   | $                  | 521    |   |             | $      | 1,114 |   |   | $ | 1,134 |   |   | $ | 2,129 |   |
| Restricted stock awards                            |   |               | 611    |   |             |   | 419 |   |   |   | 1,523 |   |   |   | 817 |   |
| Employee stock purchase plan                       |   |               | 97     |   |             |   | 75 |   |   |   | 230 |   |   |   | 308 |   |
| Total stock-based compensation                     |   |               | 1,229  |   |             |   | 1,608 |   |   |   | 2,887 |   |   |   | 3,254 |   |
| Tax effect on stock-based compensation             |   |               | -      |   |             |   | - |   |   |   | - |   |   |   | - |   |
| Net effect on net income                           |   | $                  | 1,229  |   |             | $      | 1,608 |   |   | $ | 2,887 |   |   | $ | 3,254 |   |
|                                               |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Effect on net income per share:                    |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
|  Basic                                        |   | $                  | (0.06  | )      |             | $      | (0.08 | ) |   | $ | (0.15 | ) |   | $ | (0.16 | ) |
| Diluted                                            |   | $                  | (0.06  | )      |             | $      | (0.07 | ) |   | $ | (0.14 | ) |   | $ | (0.15 | ) |

|                    |   | Three Months Ended |   |   | Six Months Ended |   |
|-------------------------|--------|--------------------|--------|--------|------------------|--------|
|                    |   | December 31,       |   |   | December 31,     |   |
|                    |   | 2010               |   |   | 2009             |   |   | 2010 |   |   | 2009 |   |
| Risk-free interest rate |   |               | 0.91   | %      |             |   | 2.18 | % |   |   | 1.19 | % |   |   | 2.27 | % |
| Expected term           |   | 4.6 years          |   |   | 4.6 years        |   |   | 4.6 years |   |   | 4.6 years |   |
| Expected dividends      |   |               | 0      | %      |             |   | 0 | % |   |   | 0 | % |   |   | 0 | % |
| Volatility              |   |               | 51     | %      |             |   | 50 | % |   |   | 50 | % |   |   | 51 | % |

----

Table of Contents

|                    |   | Three Months Ended |   |   | Six Months Ended |   |
|-------------------------|--------|--------------------|--------|--------|------------------|--------|
|                    |   | December 31,       |   |   | December 31,     |   |
|                    |   | 2010               |   |   | 2009             |   |   | 2010 |   |   | 2009 |   |
| Risk-free interest rate |   |               | 0.25   | %      |             |   | 0.53 | % |   |   | 0.25 | % |   |   | 0.53 | % |
| Expected term           |   | 1.3 years          |   |   | 1.3 years        |   |   | 1.3 years |   |   | 1.3 years |   |
| Expected dividends      |   |               | 0      | %      |             |   | 0 | % |   |   | 0 | % |   |   | 0 | % |
| Volatility              |   |               | 47     | %      |             |   | 50 | % |   |   | 47 | % |   |   | 50 | % |

----

Table of Contents

|                       |   |      |      |   | Options     |   |      | Awards   |   |
|----------------------------|--------|-----------|-----------|--------|-------------|--------|-----------|----------|--------|
|                       |   |      |      |   |        |   |      | Weighted |   |   | Restricted |   |   | Weighted |   |
|                       |   | Shares    |      |   | Number of   |   |      | Average  |   |   | Stock |   |   | Average |   |
|                       |   | Available |      |   | Options     |   |      | Exercise |   |   | Awards/Units |   |   | Grant Date |   |
|                       |   | for Grant |      |   | Outstanding |   |      | Price    |   |   | Outstanding |   |   | Fair Value |   |
| Balance, June 30, 2010     |   |      | 2,413,434 |   |        |   | 3,458,602 |     |   | $ | 14.02 |   |   |   | 478,733 |   |   | $ | 13.96 |   |
| Granted                    |   |      | (366,240  | )      |        |   | 74,000    |     |   |   | 18.33 |   |   |   | 224,800 |   |   |   | 18.81 |   |
| Exercised or vested        |   |      | -         |   |        |   | (304,612  | )        |   |   | 13.86 |   |   |   | (20,000 | ) |   |   | 18.43 |   |
| Canceled (1)               |   |      | 28,503    |   |        |   | (87,660   | )        |   |   | 43.25 |   |   |   | (4,500 | ) |   |   | 18.87 |   |
| Balance, December 31, 2010 |   |      | 2,075,697 |   |        |   | 3,140,330 |     |   | $ | 13.33 |   |   |   | 679,033 |   |   | $ | 15.40 |   |

| (1)   | The number of shares subject to option and stock awards canceled during the six months ended December 31, 2010 include 65,007 shares subject to option awards granted under the Company’s 1998 Stock Option Plan and the OCP stock option plan, which shares were not eligible to be re-granted under the 2009 Plan. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                        |            |   |               |   |    | Options Outstanding                                    |   |   | Options Vested and Exercisable  |   |
|-----------------------------|-----------------|--------|--------------------|--------|---------|--------------------------------------------------------|--------|--------|---------------------------------|--------|
|                        |            |   |               |   |    | at December 31, 2010                                   |   |   | at December 31, 2010            |   |
| Range of Exercise Price     |            |   | Number Outstanding |   |    | Weighted Average Remaining Contractual Life (in Years) |   |   | Weighted Average Exercise Price |   |   | Average Intrinsic Value (in thousands) |   |   | Number Outstanding |   |   | Weighted Average Remaining Contractual Life (in Years) |   |   | Weighted Average Exercise Price |   |   | Average Intrinsic Value (in thousands) |   |
| $                           | 1.00 - $5.00    |   |               |   | 406,904 |                                                   |   |   | 1.8                             |   |   | $ | 4.62 |   |   | $ | 5,636 |   |   |   | 406,904 |   |   |   | 1.8 |   |   | $ | 4.62 |   |   | $ | 5,636 |   |
| $                           | 5.01 - $8.00    |   |               |   | 378,234 |                                                   |   |   | 2.4                             |   |   |   | 5.70 |   |   |   | 4,828 |   |   |   | 353,993 |   |   |   | 2.1 |   |   |   | 5.57 |   |   |   | 4,565 |   |
| $                           | 8.01 - $10.00   |   |               |   | 23,981  |                                                   |   |   | 0.9                             |   |   |   | 8.76 |   |   |   | 233 |   |   |   | 23,981 |   |   |   | 0.9 |   |   |   | 8.76 |   |   |   | 233 |   |
| $                           | 10.01 - $11.00  |   |               |   | 375,186 |                                                   |   |   | 7.0                             |   |   |   | 10.10 |   |   |   | 3,142 |   |   |   | 229,670 |   |   |   | 6.8 |   |   |   | 10.10 |   |   |   | 1,922 |   |
| $                           | 11.01 - $13.00  |   |               |   | 187,061 |                                                   |   |   | 6.5                             |   |   |   | 12.15 |   |   |   | 1,183 |   |   |   | 122,763 |   |   |   | 6.0 |   |   |   | 12.27 |   |   |   | 761 |   |
| $                           | 13.01 - $15.00  |   |               |   | 521,034 |                                                   |   |   | 6.5                             |   |   |   | 13.78 |   |   |   | 2,443 |   |   |   | 325,134 |   |   |   | 6.2 |   |   |   | 13.59 |   |   |   | 1,587 |   |
| $                           | 15.01 - $18.00  |   |               |   | 278,184 |                                                   |   |   | 6.3                             |   |   |   | 16.85 |   |   |   | 452 |   |   |   | 174,753 |   |   |   | 5.6 |   |   |   | 17.20 |   |   |   | 221 |   |
| $                           | 18.01 - $20.00  |   |               |   | 214,387 |                                                   |   |   | 3.8                             |   |   |   | 18.90 |   |   |   | 7 |   |   |   | 172,387 |   |   |   | 3.1 |   |   |   | 18.91 |   |   |   | 7 |   |
| $                           | 20.01 - $27.00  |   |               |   | 746,500 |                                                   |   |   | 5.4                             |   |   |   | 20.24 |   |   |   | - |   |   |   | 746,500 |   |   |   | 5.4 |   |   |   | 20.24 |   |   |   | - |   |
| $                           | 28.00 - $158.00 |   |               |   | 8,859   |                                                   |   |   | 0.7                             |   |   |   | 57.76 |   |   |   | - |   |   |   | 8,859 |   |   |   | 0.7 |   |   |   | 57.76 |   |   |   | - |   |
|                        |            |   |               |   |    |                                                   |   |   | 3,140,330                       |   |   |   | 4.9 |   |   | $ | 13.33 |   |   | $ | 17,923 |   |   |   | 2,564,944 |   |   |   | 4.4 |   |   | $ | 13.33 |   |   | $ | 14,932 |   |
|                        |            |   |               |   |    |                                                   |   |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Vested and expected to vest |            |   | 3,116,422          |   |    |                                                   | 4.9    |   |                            | $      | 13.32 |   |   | $ | 17,829 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

Table of Contents

----

Table of Contents

|                    |   |   |   |   | Contractual Obligations Due by Period |   |
|-------------------------|--------|--------|--------|--------|---------------------------------------|--------|
| Contractual Obligations |   | Total  |   |   | Less than 1 year                      |   |   | 1-3 years |   |   | 4-5 years |   |   | After 5 years |   |
| Purchase obligations    |   | $      | 17,505 |   |                                  | $      | 17,468 |   |   | $ | 37 |   |   | $ | - |   |   | $ | - |   |
| Operating leases        |   |   | 254    |   |                                  |   | 204 |   |   |   | 50 |   |   |   | - |   |   |   | - |   |
| Capital expenditure     |   |   | 5,420  |   |                                  |   | 5,398 |   |   |   | 22 |   |   |   | - |   |   |   | - |   |
| Total                   |   | $      | 23,179 |   |                                  | $      | 23,070 |   |   | $ | 109 |   |   | $ | - |   |   | $ | - |   |

----

Table of Contents

----

Table of Contents

|                                            |   | Three Months Ended |   |   | Six Months Ended |   |
|-------------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                                            |   | December 31,       |   |   | December 31,     |   |
|                                            |   | 2010               |   |   | 2009             |   |   | 2010 |   |   | 2009 |   |
| Revenues:                                       |   |               |   |   |             |   |   |   |   |   |   |   |
| United States                                   |   | $                  | 18,941 |   |             | $      | 11,311 |   |   | $ | 36,907 |   |   | $ | 24,728 |   |
| China                                           |   |               | 11,622 |   |             |   | 8,587 |   |   |   | 22,680 |   |   |   | 16,433 |   |
|     Europe                       |   |               | 9,431  |   |             |   | 4,675 |   |   |   | 19,445 |   |   |   | 9,650 |   |
| Japan                                           |   |               | 5,426  |   |             |   | 4,544 |   |   |   | 9,976 |   |   |   | 8,205 |   |
| Canada                                          |   |               | 2,368  |   |             |   | 745 |   |   |   | 4,307 |   |   |   | 1,555 |   |
|   Asia-Pacific (excluding China and Japan) |   |               | 4,237  |   |             |   | 2,881 |   |   |   | 8,350 |   |   |   | 5,737 |   |
| Totals                                          |   | $                  | 52,025 |   |             | $      | 32,743 |   |   | $ | 101,665 |   |   | $ | 66,308 |   |

|                           |   | December 31, |   |   | June 30, |   |
|--------------------------------|--------|--------------|--------|--------|----------|--------|
|                           |   | 2010         |   |   | 2010     |   |
|                           |   |         |   |   |     |   |
| United States                  |   | $            | 5,908  |   |     | $      | 5,959 |   |
| China                          |   |         | 25,133 |   |     |   | 23,325 |   |
| Asia-Pacific (excluding China) |   |         | 4,301  |   |     |   | 4,079 |   |
| Totals                         |   | $            | 35,342 |   |     | $      | 33,363 |   |

----

Table of Contents

ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

----

Table of Contents

| ·   | revenue recognition and product returns; |
|--------------------|------------------------------------------|

| ·   | depreciation and amortization; |
|--------------------|--------------------------------|

| ·   | warranty obligations; |
|--------------------|-----------------------|

| ·   | allowance for doubtful accounts; |
|--------------------|----------------------------------|

| ·   | excess and obsolete inventory; |
|--------------------|--------------------------------|

| ·   | impairment of investments; |
|--------------------|----------------------------|

| ·   | impairment of long-lived asset; |
|--------------------|---------------------------------|

| ·   | impairment of goodwill and other intangible assets; |
|--------------------|-----------------------------------------------------|

| ·   | fair value accounting; |
|--------------------|------------------------|

| ·   | business combination; |
|--------------------|-----------------------|

| ·   | income taxes; |
|--------------------|---------------|

| ·   | stock compensation; and |
|--------------------|-------------------------|

| ·   | loss contingencies. |
|--------------------|---------------------|

----

Table of Contents

|     |   | Three Months Ended                 |   |   |   |   |   | Percentage |   |   | Six Months Ended |   |   |   |   |   | Percentage |   |
|----------|--------|------------------------------------|--------|--------|--------|--------|--------|------------|--------|--------|------------------|--------|--------|--------|--------|--------|------------|--------|
|     |   | December 31,                       |   |   | Change |   |   | Change     |   |   | December 31,     |   |   | Change |   |   | Change     |   |
|     |   | 2010                               |   |   | 2009   |   |   |       |   |   |             |   |   | 2010   |   |   | 2009       |   |   |   |   |   |   |   |
|     |   | (In thousands, except percentages) |   |
|     |   |                               |   |   |   |   |   |       |   |   |             |   |   |   |   |   |       |   |   |   |   |   |   |   |
| Revenues |   | $                                  | 52,025 |   |   | $      | 32,743 |       |   | $      | 19,282           |   |   |   | 58.9   | %      |       | $      | 101,665 |   |   | $ | 66,308 |   |   | $ | 35,357 |   |   |   | 53.3 | % |

|                |   | Three Months Ended                 |   |   |   |   |   | Percentage |   |   | Six Months Ended |   |   |   |   |   | Percentage |   |
|---------------------|--------|------------------------------------|--------|--------|--------|--------|--------|------------|--------|--------|------------------|--------|--------|--------|--------|--------|------------|--------|
|                |   | December 31,                       |   |   | Change |   |   | Change     |   |   | December 31,     |   |   | Change |   |   | Change     |   |
|                |   | 2010                               |   |   | 2009   |   |   |       |   |   |             |   |   | 2010   |   |   | 2009       |   |   |   |   |   |   |   |
|                |   | (In thousands, except percentages) |   |
|                |   |                               |   |   |   |   |   |       |   |   |             |   |   |   |   |   |       |   |   |   |   |   |   |   |
| Gross profit        |   | $                                  | 19,109 |   |   | $      | 11,012 |       |   | $      | 8,097            |   |   |   | 73.5   | %      |       | $      | 35,230 |   |   | $ | 20,844 |   |   | $ | 14,386 |   |   |   | 69.0 | % |
| Gross profit margin |   |                               | 36.7   | %      |   |   | 33.6   | %          |   |   |             |   |   |   |   |   |       |   | 34.7 | % |   |   | 31.4 | % |   |   |   |   |   |   |   |   |

----

Table of Contents

|         |   | Three Months Ended                 |   |   |   |   |   | Percentage |   |   | Six Months Ended |   |   |   |   |   | Percentage |   |
|--------------|--------|------------------------------------|--------|--------|--------|--------|--------|------------|--------|--------|------------------|--------|--------|--------|--------|--------|------------|--------|
|         |   | December 31,                       |   |   | Change |   |   | Change     |   |   | December 31,     |   |   | Change |   |   | Change     |   |
|         |   | 2010                               |   |   | 2009   |   |   |       |   |   |             |   |   | 2010   |   |   | 2009       |   |   |   |   |   |   |   |
|         |   | (In thousands, except percentages) |   |
|         |   |                               |   |   |   |   |   |       |   |   |             |   |   |   |   |   |       |   |   |   |   |   |   |   |
| Research and |   |                               |   |   |   |   |   |       |   |   |             |   |   |   |   |   |       |   |   |   |   |   |   |   |
| development  |   | $                                  | 4,307  |   |   | $      | 2,513  |       |   | $      | 1,794            |   |   |   | 71.4   | %      |       | $      | 8,040 |   |   | $ | 5,007 |   |   | $ | 3,033 |   |   |   | 60.6 | % |

|      |   | Three Months Ended                 |   |   |   |   |   | Percentage |   |   | Six Months Ended |   |   |   |   |   | Percentage |   |
|-----------|--------|------------------------------------|--------|--------|--------|--------|--------|------------|--------|--------|------------------|--------|--------|--------|--------|--------|------------|--------|
|      |   | December 31,                       |   |   | Change |   |   | Change     |   |   | December 31,     |   |   | Change |   |   | Change     |   |
|      |   | 2010                               |   |   | 2009   |   |   |       |   |   |             |   |   | 2010   |   |   | 2009       |   |   |   |   |   |   |   |
|      |   | (In thousands, except percentages) |   |
|      |   |                               |   |   |   |   |   |       |   |   |             |   |   |   |   |   |       |   |   |   |   |   |   |   |
| Sales and |   |                               |   |   |   |   |   |       |   |   |             |   |   |   |   |   |       |   |   |   |   |   |   |   |
| marketing |   | $                                  | 2,924  |   |   | $      | 2,284  |       |   | $      | 640              |   |   |   | 28.0   | %      |       | $      | 5,811 |   |   | $ | 4,698 |   |   | $ | 1,113 |   |   |   | 23.7 | % |

|           |   | Three Months Ended                 |   |   |   |   |   | Percentage |   |   | Six Months Ended |   |   |   |   |   | Percentage |   |
|----------------|--------|------------------------------------|--------|--------|--------|--------|--------|------------|--------|--------|------------------|--------|--------|--------|--------|--------|------------|--------|
|           |   | December 31,                       |   |   | Change |   |   | Change     |   |   | December 31,     |   |   | Change |   |   | Change     |   |
|           |   | 2010                               |   |   | 2009   |   |   |       |   |   |             |   |   | 2010   |   |   | 2009       |   |   |   |   |   |   |   |
|           |   | (In thousands, except percentages) |   |
|           |   |                               |   |   |   |   |   |       |   |   |             |   |   |   |   |   |       |   |   |   |   |   |   |   |
| General and    |   |                               |   |   |   |   |   |       |   |   |             |   |   |   |   |   |       |   |   |   |   |   |   |   |
| administrative |   | $                                  | 2,265  |   |   | $      | 2,724  |       |   | $      | (459             | )      |   |   | -16.9  | %      |       | $      | 4,911 |   |   | $ | 5,395 |   |   | $ | (484 | ) |   |   | -9.0 | % |

----

Table of Contents

|                       |   | Three Months Ended                 |   |   |   |   |   | Percentage |   |   | Six Months Ended |   |   |   |   |   | Percentage |   |
|----------------------------|--------|------------------------------------|--------|--------|--------|--------|--------|------------|--------|--------|------------------|--------|--------|--------|--------|--------|------------|--------|
|                       |   | December 31,                       |   |   | Change |   |   | Change     |   |   | December 31,     |   |   | Change |   |   | Change     |   |
|                       |   | 2010                               |   |   | 2009   |   |   |       |   |   |             |   |   | 2010   |   |   | 2009       |   |   |   |   |   |   |   |
|                       |   | (In thousands, except percentages) |   |
|                       |   |                               |   |   |   |   |   |       |   |   |             |   |   |   |   |   |       |   |   |   |   |   |   |   |
| Stock-based                |   |                               |   |   |   |   |   |       |   |   |             |   |   |   |   |   |       |   |   |   |   |   |   |   |
|  compensation expense |   | $                                  | 1,229  |   |   | $      | 1,608  |       |   | $      | (379             | )      |   |   | -23.6  | %      |       | $      | 2,887 |   |   | $ | 3,254 |   |   | $ | (367 | ) |   |   | -11.3 | % |

|               |   | Three Months Ended                 |   |   |   |   |   | Percentage |   |   | Six Months Ended |   |   |   |   |   | Percentage |   |
|--------------------|--------|------------------------------------|--------|--------|--------|--------|--------|------------|--------|--------|------------------|--------|--------|--------|--------|--------|------------|--------|
|               |   | December 31,                       |   |   | Change |   |   | Change     |   |   | December 31,     |   |   | Change |   |   | Change     |   |
|               |   | 2010                               |   |   | 2009   |   |   |       |   |   |             |   |   | 2010   |   |   | 2009       |   |   |   |   |   |   |   |
|               |   | (In thousands, except percentages) |   |
|               |   |                               |   |   |   |   |   |       |   |   |             |   |   |   |   |   |       |   |   |   |   |   |   |   |
| Interest and other |   |                               |   |   |   |   |   |       |   |   |             |   |   |   |   |   |       |   |   |   |   |   |   |   |
| income, net        |   | $                                  | 54     |   |   | $      | 193    |       |   | $      | (139             | )      |   |   | -72.0  | %      |       | $      | 111 |   |   | $ | 467 |   |   | $ | (356 | ) |   |   | -76.2 | % |

----

Table of Contents

----

Table of Contents

----

Table of Contents

|                    |   |   |   |   | Contractual Obligations Due by Period |   |
|-------------------------|--------|--------|--------|--------|---------------------------------------|--------|
| Contractual Obligations |   | Total  |   |   | Less than 1 year                      |   |   | 1-3 years |   |   | 4-5 years |   |   | After 5 years |   |
| Purchase obligations    |   | $      | 17,505 |   |                                  | $      | 17,468 |   |   | $ | 37 |   |   | $ | - |   |   | $ | - |   |
| Operating leases        |   |   | 254    |   |                                  |   | 204 |   |   |   | 50 |   |   |   | - |   |   |   | - |   |
| Capital expenditure     |   |   | 5,420  |   |                                  |   | 5,398 |   |   |   | 22 |   |   |   | - |   |   |   | - |   |
| Total                   |   | $      | 23,179 |   |                                  | $      | 23,070 |   |   | $ | 109 |   |   | $ | - |   |   | $ | - |   |

----

Table of Contents

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

|                                |   | Carrying     |    |   | Average Rate |   |   | Carrying |   |   | Average Rate |   |
|-------------------------------------|--------|--------------|---------|--------|--------------|--------|--------|----------|--------|--------|--------------|--------|
|                                |   | Value at     |    |   | of Return at |   |   | Value at |   |   | of Return at |   |
|                                |   | December 31, |    |   | December 31, |   |   | June 30, |   |   | June 30,     |   |
|                                |   | 2010         |    |   | 2010         |   |   | 2010     |   |   | 2010         |   |
|                                |   |         |    |   | (Annualized) |   |   |     |   |   | (Annualized) |   |
| Investment Securities:              |   |         |    |   |         |   |   |     |   |   |         |   |
| Cash equivalents - variable rate    |   | $            | -       |   |         |   | -      |     |   | $      | 8,423        |   |   |   | 0.1 | % |
| Cash equivalents - fixed rate       |   |         | 40,218  |   |         |   | 0.2    | %        |   |   | 9,759        |   |   |   | 0.2 | % |
| Short-term investments - fixed rate |   |         | 99,295  |   |         |   | 0.5    | %        |   |   | 109,632      |   |   |   | 1.0 | % |
| Long-term investments - fixed rate  |   |         | -       |   |         |   | -      |     |   |   | 10,000       |   |   |   | 1.4 | % |
| Total                               |   | $            | 139,513 |   |         |   |   |     |   | $      | 137,814      |   |   |   |   |   |

----

Table of Contents

ITEM 4 - CONTROLS AND PROCEDURES

PART II

ITEM 1 - LEGAL PROCEEDINGS

Item 1A - RISK FACTORS

| ·   | quarterly variations in our operating results; |
|--------------------|------------------------------------------------|

| ·   | changes in financial estimates by securities analysts and/or our failure to meet estimates; |
|--------------------|---------------------------------------------------------------------------------------------|

| ·   | changes in market values of comparable companies; |
|--------------------|---------------------------------------------------|

| ·   | announcements by our competitors or us of new products or of significant acquisitions, strategic partnerships or joint ventures; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------|

| ·   | any loss by us of a major customer; |
|--------------------|-------------------------------------|

| ·   | economic fluctuations in the market for optical communications products, or in the telecommunications industry generally; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------|

| ·   | the outcome of, and costs associated with, any litigation to which we are or may become a party; |
|--------------------|--------------------------------------------------------------------------------------------------|

| ·   | departures of key management or engineering personnel; and |
|--------------------|------------------------------------------------------------|

| ·   | future sales of our common stock. |
|--------------------|-----------------------------------|

----

Table of Contents

| ·   | obtain from the owner of the infringed intellectual property right a license to sell or use the relevant technology, which license may not be available on reasonable terms, or at all; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | stop selling, incorporating or using our products that use the challenged intellectual property; |
|--------------------|--------------------------------------------------------------------------------------------------|

| ·   | pay substantial monetary damages; or |
|--------------------|--------------------------------------|

| ·   | redesign the products that use the technology. |
|--------------------|------------------------------------------------|

----

Table of Contents

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

ITEM 4 – (Removed and Reserved)

ITEM 5 - OTHER INFORMATION

----

Table of Contents

ITEM 6 - EXHIBITS

| Exhibit No. |   | Description                                                                                                                                                                                                                                 |
|-------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1(1)      |   | Amended and Restated Certificate of Incorporation of the Registrant.                                                                                                                                                                        |
| 3.2(2)      |   | Bylaws of the Registrant.                                                                                                                                                                                                                   |
| 3.3(3)      |   | Certificate of Designation of Series A Junior Participating Preferred Stock.                                                                                                                                                                |
| 3.4(4)      |   | Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Registrant.                                                                                                                                            |
| 3.5(5)      |   | Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Registrant.                                                                                                                                            |
| 3.6(6)      |   | Amendment to Bylaws of the Registrant                                                                                                                                                                                                       |
| 10.12       |   | Amendment to Executive Corporate Event Agreement between the Registrant and Joseph Y. Liu                                                                                                                                                   |
| 10.13       |   | Form of Amendment to Executive Corporate Event Agreement for Executive Officers                                                                                                                                                             |
| 31.1        |   | Certification of Chief Executive Officer Required under Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.                                                                                                                  |
| 31.2        |   | Certification of Chief Financial Officer Required under Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.                                                                                                                  |
| 32.1        | *      | Certification of Chief Executive Officer Required under Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. Section 1350). |
| 32.2        | *      | Certification of Chief Financial Officer Required under Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350.                                                                    |

| (1) | Previously filed as Exhibit 3.2 to the Registrant’s Registration Statement on Form S-1/A filed on August 29, 2000 and incorporated herein by reference. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Previously filed as Exhibit 3.3 to the Registrant’s Registration Statement on Form S-1/A filed on August 1, 2000 and incorporated herein by reference.  |
| (3) | Previously filed as Exhibit 4.1 to the Registrant’s Report on Form 8-K filed on March 22, 2002 and incorporated herein by reference.                    |
| (4) | Previously filed as Exhibit 3.4 to the Registrant’s Quarterly Report on Form 10-Q filed on November 14, 2005 and incorporated herein by reference.      |
| (5) | Previously filed as Exhibit 3.5 to the Registrant’s Quarterly Report on Form 10-Q filed on February 9, 2007 and incorporated herein by reference.       |
| (6) | Previously filed as Exhibit 3.1 to the Registrant’s Report on Form 8-K filed on December 20, 2007 and incorporated herein by reference.                 |

|   | * | The certifications attached as Exhibits 32.1 and 32.2 accompanies this Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

SIGNATURES

|                    | OPLINK COMMUNICATIONS, INC. |                                |
|-------------------------|-----------------------------|-------------------------------------|
|                    |                        |                                |   |
| Date: February 11, 2011 | By:                         | /s/ Shirley Yin                |   |
|                    |                        | Shirley Yin                         |   |
|                    |                        | Chief Financial Officer             |   |
|                    |                        |  (Principal Financial Officer) |   |

----