<PAGE>
================================================================================
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

         (Mark One)
         [ X ]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended September 30, 2001

                                       or

         [   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934

                  For the transition period from              to
                                                 ------------    ------------
                        Commission file number 000-31581

                          OPLINK COMMUNICATIONS , INC.

             (Exact name of registrant as specified in its charter)

Delaware                                                     No. 77-0411346
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)

                   3469 North First Street, San Jose, CA 95134
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (408) 433-0606


         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes  X   No
                                              ---     ---

         The number of shares of the Registrant's Common Stock outstanding as of
October 28, 2001 was 159,640,705

================================================================================

<PAGE>

                           OPLINK COMMUNICATIONS, INC.

                                    FORM 10-Q

                                      INDEX
<TABLE>
<CAPTION>

                                                                             Page
                                                                             ----
PART I.   FINANCIAL INFORMATION
-------   ---------------------
<S>                                                                          <C>
Item 1.   Financial Statements (unaudited):

          Condensed Consolidated Balance Sheets -
               September 30, 2001 and June 30, 2001                            3

          Condensed Consolidated Statements of Operations -
               Three months ended September 30, 2001 and 2000                  4

          Condensed Consolidated Statements of Cash Flows -
               Three months ended September 30, 2001 and 2000                  5

          Notes to Condensed Consolidated Financial Statements                 7

Item 2.        Management's Discussion and Analysis of Financial
               Condition and Results of Operations                            11

Item 3.        Quantitative and Qualitative Disclosures About Market Risk     32

PART II.  OTHER INFORMATION
--------  -----------------

Item 1.   Legal Proceedings                                                   33

Item 2.   Changes in Securities and Use of Proceeds                           33

Item 3.   Defaults Upon Senior Securities                                     33

Item 4.   Submission of Matters to a Vote of Security Holders                 33

Item 5.   Other Information                                                   34

Item 6.   Exhibits and Reports on Form 8-K                                    34

SIGNATURES                                                                    35

</TABLE>

                                       2

<PAGE>

PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements

                           OPLINK COMMUNICATIONS, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

                                                       September 30   June 30,
                                                       ------------------------
                                                           2001         2001
                                                         ---------    ---------
ASSETS                                                  (Unaudited)
Current assets:
   Cash and cash equivalents                             $ 213,330    $ 246,473
   Short-term investments                                   26,126         --
   Accounts receivable, net                                 11,878       17,178
   Inventories                                               9,204       21,739
   Assets held for sale                                      1,756         --
   Prepaid expenses                                          3,598        8,501
                                                         ---------    ---------
       Total current assets                                265,892      293,891
Property and equipment, net                                 67,267       92,086
Intangible assets                                              625          667
Other assets                                                 1,257        1,258
                                                         ---------    ---------
       Total assets                                      $ 335,041    $ 387,902
                                                         =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                      $   9,061    $  21,596
   Accrued liabilities                                      21,792       18,629
   Current portion of capital lease obligations              3,817        3,534
   Borrowings under the line of credit                       2,416        1,148
                                                         ---------    ---------
       Total current liabilities                            37,086       44,907

Capital lease obligations, non current                       4,331        4,988
                                                         ---------    ---------
       Total liabilities                                    41,417       49,895
                                                         ---------    ---------
Commitments and contingencies (Note 10)

Stockholders' equity:
   Common stock                                                161          161
   Additional paid-in capital                              467,890      472,102
   Notes receivable from stockholders                       (3,961)      (3,889)
   Deferred stock compensation                             (12,665)     (17,554)
   Accumulated comprehensive income                             78           25
   Accumulated deficit                                    (157,879)    (112,838)
                                                         ---------    ---------
       Total stockholders' equity                          293,624      338,007
                                                         ---------    ---------
         Total liabilities and stockholders' equity      $ 335,041    $ 387,902
                                                         =========    =========

The accompanying notes are an integral part of these condensed consolidated
financial statements.


                                       3

<PAGE>

                           OPLINK COMMUNICATIONS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                   (Unaudited)

                                                           Three Months Ended
                                                              September 30,
                                                         ----------------------
                                                            2001         2000
                                                         ---------    ---------
Revenues                                                 $  10,016    $  32,277
Cost of revenues:
   Cost of revenues                                         22,415       24,587
   Non-cash compensation expense (recovery)                   (426)       1,353
                                                         ---------    ---------
     Total cost of revenues                                 21,989       25,940
                                                         ---------    ---------

Gross profit (loss)                                        (11,973)       6,337
                                                         ---------    ---------

Operating expenses:
   Research and development:
     Research and development                                3,754        3,619
     Non-cash compensation expense                              92        1,405
                                                         ---------    ---------
       Total research and development                        3,846        5,024
                                                         ---------    ---------

   Sales and marketing:
     Sales and marketing                                     1,952        2,368
     Non-cash compensation expense                             111          603
                                                         ---------    ---------
       Total sales and marketing                             2,063        2,971
                                                         ---------    ---------

   General and administrative:
     General and administrative                              2,196        2,693
     Non-cash compensation expense                             847        5,370
                                                         ---------    ---------
       Total general and administrative                      3,043        8,063
                                                         ---------    ---------

   Restructuring costs and other special charges            25,643         --
   Amortization of goodwill and intangible assets               42          983
                                                         ---------    ---------
         Total operating expenses                           34,637       17,041
                                                         ---------    ---------

Loss from operations                                       (46,610)     (10,704)
Interest and other income, net                               1,569           12
                                                         ---------    ---------

Net loss                                                 $ (45,041)   $ (10,692)
                                                         =========    =========

Basic and diluted net loss per share                     $   (0.28)   $   (0.40)
                                                         =========    =========

Basic and diluted weighted average shares outstanding      161,343       26,817
                                                         =========    =========

The accompanying notes are an integral part of these condensed consolidated
financial statements.


                                       4

<PAGE>

                           OPLINK COMMUNICATIONS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                   Three Months Ended
                                                                      September 30,
                                                                 ----------------------
                                                                    2001        2000
                                                                 ---------    ---------
<S>                                                              <C>          <C>
Cash flows from operating activities:
   Net loss                                                      $ (45,041)   $ (10,692)
   Adjustments to reconcile net loss to net cash
     used in operating activities:
       Non-cash restructuring costs and other special charges       16,260         --
       Depreciation and amortization of property and equipment       3,505        1,147
       Amortization of goodwill and intangible assets                   42        1,372
       Amortization of deferred compensation                           624        8,731
       Provision for excess and obsolete inventory                  10,407        3,283
       Other                                                             5          100
       Change in assets and liabilities:
         Accounts receivable                                         5,300       (8,317)
         Inventories                                                 2,128       (5,542)
         Prepaid expenses                                            4,903       (2,192)
         Other assets                                                    1         (369)
         Accounts payable                                           (7,165)        (138)
         Accrued liabilities                                         3,164        3,945
                                                                 ---------    ---------
           Net cash used in operating activities                    (5,867)      (8,672)
                                                                 ---------    ---------

Cash flows from investing activities:
   Purchase of short-term investments                              (26,074)          --
   Purchase of property and equipment                               (1,608)     (11,125)
                                                                 ---------    ---------
           Net cash used in investing activities                   (27,682)     (11,125)
                                                                 ---------    ---------

Cash flows from financing activities:
   Proceeds from issuance of common stock upon the
     exercise of options, net of repurchases                            53          445
   Proceeds from issuance of convertible note payable                   --       50,000
   Proceeds from borrowings under line of credit                     1,268          648
   Repayment of capital lease obligations                             (915)        (196)
                                                                 ---------    ---------
           Net cash provided by financing activities                   406       50,897
                                                                 ---------    ---------

Net increase in cash and cash equivalents                          (33,143)      31,100
Cash and cash equivalents, beginning of year                       246,473       26,665
                                                                 ---------    ---------
Cash and cash equivalents, end of year                           $ 213,330    $  57,765
                                                                 =========    =========
</TABLE>

                            (Continued on next page)

The accompanying notes are an integral part of these condensed consolidated
financial statements.


                                       5

<PAGE>

                           OPLINK COMMUNICATIONS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)

                         (CONTINUED FROM PREVIOUS PAGE)

                                                            Three Months Ended
                                                                September 30,
                                                            --------------------
                                                              2001       2000
                                                            --------   --------
Supplemental disclosures of cash flow information:
   Cash paid during the period for interest expense         $    222   $     54
                                                            ========   ========
  Cash paid during the period for income taxes              $   --     $  1,080
                                                            ========   ========

Supplemental non-cash investing and financing activities:
   Property and equipment acquired under capital lease      $    541   $  2,632
                                                            ========   ========
   Forfeiture of common stock option grants                 $ (1,789)  $   (750)
                                                            ========   ========
   Deferred compensation related to common stock
     option grants to employees                             $   --     $ 25,014
                                                            ========   ========
   Return of property and equipment                         $  5,370   $   --
                                                            ========   ========

The accompanying notes are an integral part of these condensed consolidated
financial statements.


                                       6

<PAGE>

                           OPLINK COMMUNICATIONS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1. Description of Business. Oplink Communications, Inc. ("Oplink" or the
   -----------------------
"Company") designs, manufactures and markets fiber optic networking components
and integrated optical subsystems that increase the performance and capacity of
optical networks. The Company provides a broad line of products to
communications equipment suppliers to enable bandwidth creation and management
within an optical network. The Company was incorporated in September 1995,
reincorporated in Delaware in September 2000 and began shipping its products for
sale in 1996. In April 1999, the Company established manufacturing operations in
China. The Company conducts its business within one operating segment and has no
organizational structure dictated by product, service line, geography or
customer type.

2. Basis of Presentation. The condensed consolidated financial statements
   ---------------------
included herein have been prepared by the Company, without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission ("SEC").
Certain information and footnote disclosures, normally included in financial
statements prepared in accordance with generally accepted accounting principles,
have been condensed or omitted pursuant to such rules and regulations. The
financial statements presented herein have been prepared by management, without
audit by independent accountants who do not express an opinion thereon, and
should be read in conjunction with the consolidated financial statements and
notes thereto for the fiscal year ended June 30, 2001 included in the Company's
Annual Report on Form 10-K.

     The Company operates and reports using a fiscal year which ends on the
Sunday closest to June 30. Interim fiscal quarters end on the Sunday closest to
each calendar quarter end. For presentation purposes, the Company presents each
fiscal year as if it ended on June 30. The Company presents each of the fiscal
quarters as if it ended on the last day of each calendar quarter. Fiscal year
2002 consists of 52 weeks.

     In the opinion of the management, these unaudited financial statements
contain all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the financial position of the Company at September
30, 2001, the results of its operations for the three-month periods ended
September 30, 2001 and 2000 and its cash flows. The results of operations for
the periods presented are not necessarily indicative of those that may be
expected for the full year.

3. Net Loss Per Share. The Company computes net loss per share in accordance
   ------------------
with Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per
Share," and SEC Staff Accounting Bulletin ("SAB") No. 98. Under the provisions
of SFAS No. 128 and SAB No. 98, basic net loss per share is computed by dividing
the net loss for the period by the weighted average number of shares of common
stock outstanding during the period. Diluted net loss per share is computed by
dividing the net loss for the period by the weighted average number of common
and common equivalent shares outstanding during the period, if dilutive.
Potentially dilutive common equivalent shares are composed of preference shares,
warrants and the incremental common shares issuable upon the exercise of stock
options. The following is a reconciliation of the numerators and denominators of
the Basic and Diluted net loss per share computations for the periods presented
(in thousands, except per share data):


                                       7

<PAGE>

<TABLE>
<CAPTION>
                                                                Three Months Ended
                                                                    September 30,
                                                                 2001         2000
                                                              -----------------------
<S>                                                           <C>          <C>
Numerator:
   Net loss attributable to holders of Common Stock           $ (45,041)   $ (10,692)
                                                              =========    ==========
Denominator:
   Weighted average shares outstanding                          161,343       26,817
                                                              ---------    ----------
Denominator for basic and diluted calculations                  161,343       26,817
                                                              =========    ==========
   Basic and diluted net loss per share                       $   (0.28)   $   (0.40)
                                                              =========    ==========

Antidilutive securities including options, warrants,
   preferred shares and shares per convertible note payable
   not included in net loss per share calculation                26,358      132,308
                                                              =========    ==========
</TABLE>


4. Short-Term Investments. Short-term investments consist of commercial paper
   ----------------------
with maturities of less than one year from the balance sheet date. Oplink's
short-term investments are classified as available-for-sale. These securities
are carried at fair value with the unrealized gains and losses, net of taxes,
reported as a component of stockholders' equity.

5. Comprehensive Loss. Statement of Financial Accounting Standards ("SFAS") No.
   ------------------
130 requires disclosure of non-stockholder changes in equity, which include
unrealized gains and losses on securities classified as available-for-sale under
SFAS No. 115 and foreign currency translation adjustments accounted for under
SFAS No. 52.

     The reconciliation of net loss to comprehensive loss for the three months
ended September 30, 2001 and 2000 is as follows (in thousands):

                                                    Three Months Ended
                                                       September 30,
                                                     2001           2000
                                                 ------------------------
Net loss                                          $(45,041)     $(10,692)
Unrealized gain on investments                          52            --
Change in cumulative translation adjustments            26           (30)
                                                 ------------------------
   Total comprehensive income                     $(44,963)     $(10,722)
                                                 ------------------------


6. Inventories. Inventories are stated at the lower of cost (first-in,
   -----------
first-out) or market. Inventories consist of (in thousands):

                                                September 30,    June 30,
                                                    2001           2001
                                                -------------    ---------
Inventories:
    Raw materials                                $  26,326       $ 24,963
    Work-in-process                                 13,387         16,723
    Finished goods                                   8,341          7,187
                                                 ---------       --------
                                                    48,054         48,873
    Less:  Reserves                                (38,850)       (27,134)
                                                 ---------       --------
                                                 $   9,204       $ 21,739
                                                 =========       ========

                                       8

<PAGE>

7. Restructuring Costs and Other Special Charges. In September 2001, the Company
   ---------------------------------------------
committed to a plan to restructure its business and realign its resources to
focus on reducing expenses, preserving cash, accelerating its planned move of
manufacturing operations to China and focusing on core opportunities due to the
decline in current business conditions. This restructuring plan includes a
workforce reduction and consolidation of excess facilities. As a result of such
restructuring plan and decline in forecasted revenue, the Company recorded
restructuring costs and other special charges of $25.6 million classified as
operating expenses. In addition to the costs related to the restructuring, an
excess and obsolete inventory charge of $10.4 million, classified as cost of
sales, was recorded in September 2001. The following paragraphs provide detailed
information relating to the restructuring costs and other special charges and
the excess and obsolete inventory charge, which were recorded during the three
months ended September 30, 2001.

Worldwide workforce reduction

       The restructuring plan resulted in the reduction of 1,310 regular
employees, worldwide, in the three months ended September 30, 2001. The
worldwide workforce reductions started in the fourth quarter of fiscal 2001 and
will be substantially completed by the third quarter of fiscal 2002. The Company
recorded a workforce reduction charge of approximately $2.9 million in the first
quarter of fiscal 2002 relating primarily to severance and fringe benefits. In
addition, the number of temporary and contract workers employed by the Company
will be reduced.

Excess fixed assets, facilities and other special charges

       The Company recorded a restructuring charge of $16.6 million and $4.3
million relating to excess fixed assets and the consolidation of excess
facilities, respectively. The excess fixed assets charge represents the charge
required to remeasure such assets at the lower of carrying amount or fair value
less cost to sell. While these assets are being actively marketed, the Company
expects the period of disposal to be nine months to one year for most of the
assets. The consolidation of excess facilities includes the closure of certain
manufacturing, and research and development facilities. The charge relates
primarily to lease terminations and non-cancelable lease costs. The Company also
recorded other restructuring costs and special charges of $1.8 million relating
primarily to payments due to suppliers and vendors to terminate agreements for
the purchase of capital equipment and inventory.

Summary

       A summary of the restructuring costs and other special charges is
outlined as follows (in thousands):

<TABLE>
<CAPTION>
                                     Restructuring                                                       Restructuring
                                     Liabilities at                                                      Liabilities at
                                        June 30,           Total          Non-cash           Cash         September 30,
                                          2001             Charge          Charge          Payments           2001
                                     --------------       -------          -------         --------      --------------
<S>                                      <C>              <C>              <C>              <C>              <C>
Workforce reduction                      $   250          $ 2,899          $  --            $ 1,619          $ 1,530
Excess fixed assets                                        16,635           16,260              193              182
Consolidation of excess
   facilities and other charges            4,294            6,109             --              1,271            9,132
                                         -------          -------          -------          -------          -------
                                         $ 4,544          $25,643          $16,260          $ 3,083          $10,844
                                         =======          =======          =======          =======          =======
</TABLE>

Provision for inventory

       The Company recorded a provision for excess and obsolete inventory
totaling $10.4 million, which was charged to cost of sales during the first
quarter of fiscal 2002. This excess inventory charge was due to a


                                       9

<PAGE>

sudden and material decline in backlog and forecasted revenue and was calculated
as the inventory levels in excess of twelve-month demand.

8. Repurchase of Common Stock. On September 26, 2001, the Board of Directors
   --------------------------
authorized a program to repurchase up to an aggregate of $21,200,000 of the
Company's Common Stock. Such repurchases may be made from time to time on the
open market at prevailing market prices or in negotiated transactions off the
market. As of September 30, 2001, there were no repurchases under this program.

9. Recent Accounting Pronouncements. In July 2001, the FASB issued SFAS No. 141,
   --------------------------------
"Business Combinations." SFAS No. 141 requires the purchase method of accounting
for business combinations initiated after June 30, 2001 and eliminates the
pooling-of-interests method.

     In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets," which is effective for fiscal years beginning after March 15, 2001.
SFAS No. 142 requires, among other things, the discontinuance of goodwill
amortization. In addition, the standard includes provisions upon adoption for
the reclassification of certain existing recognized intangibles as goodwill,
reassessment of the useful lives of existing recognized intangibles,
reclassification of certain intangibles out of previously reported goodwill and
the testing for impairment of existing goodwill and other intangibles. The
Company does not believe that the adoption of SFAS No. 142 will have a material
impact on our financial position, results of operations or cash flows.

     In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". FAS 144 supercedes FAS 121 and
applies to all long-lived assets (including discontinued operations) and
consequently amends Accounting Principles Board Opinion No. 30 (APB 30),
"Reporting Results of Operations Reporting the Effects of Disposal of a Segment
of a Business". FAS 144 develops one accounting model (based on the model in FAS
121) for long-lived assets that are to be disposed of by sale, as well as
addresses the principal implementation issues. FAS 144 requires that long-lived
assets that are to be disposed of by sale be measured at the lower of book value
or fair value less cost to sell. That requirement eliminates APB 30's
requirement that discontinued operations be measured at net realizable value or
that entities include under "discontinued operations" in the financial
statements amounts for operating losses that have not yet occurred.
Additionally, FAS 144 expands the scope of discontinued operations to include
all components of an entity with operations that (1) can be distinguished from
the rest of the entity and (2) will be eliminated from the ongoing operations of
the entity in a disposal transaction. We do not believe that the adoption of
SFAS No. 144 will have a material impact on our financial position, results of
operations or cash flows.

10. Contingencies. In June 2000, Chorum Technologies, LP filed a lawsuit in the
    -------------
United States District Court for the Northern District of Texas against the
Company and Telelight Communication Inc., a wholly owned subsidiary, alleging
patent infringement and trademark claims relating to the manufacture of and
offer to sell fiber optic interleaver products. On May 7, 2001, the Company
filed a lawsuit against Chorum in the United States District Court for the
District of Delaware, alleging, among other matters, that Chorum infringes one
of the Company's patents relating to fiber optic couplers based on Chorum's
manufacture and sale of DWDM products.

     In October 2001, the Company reached an agreement with Chorum and its
affiliates to dismiss the patent infringement litigation between the companies
without prejudice.

     In November 2001, a securities class action complaint was filed against us,
the underwriters of our initial public offering, and certain of our directors
and officers in the United States District Court for the Southern


                                       10

<PAGE>

District of New York. The complaint alleges that the underwriters entered into
certain arrangements with investors in connection with our initial public
offering, and that these alleged arrangements should have been and were not
disclosed in the registration statement and prospectus. The complaints seek
unspecified monetary damages and attorneys fees and other costs.

Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

    This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including, without limitation, statements regarding the
Company's expectations, beliefs, intentions, or future strategies that are
signified by the words "expects," "anticipates," "intends," "believes," or
similar language. All forward-looking statements included in this document are
based on information available to the Company on the date hereof, and the
Company assumes no obligation to update any such forward-looking statements.
Actual results could differ materially from those projected in the
forward-looking statements. In evaluating the Company's business, prospective
investors should carefully consider the information set forth below under the
caption "Risk Factors" in addition to the other information set forth herein.
The Company cautions investors that its business and financial performance are
subject to substantial risks and uncertainties.

    The following discussion and analysis of our financial condition and results
of operations should be read in conjunction with our condensed consolidated
financial statements and related notes in this report, and Management's
Discussion and Analysis of Financial Condition and Results of Operations and
related financial information contained in the Company's Form 10-K (File No.
000-31581).

Overview

   We design and manufacture a broad line of high performance fiber optic
networking components and integrated optical subsystems and market them
worldwide to communications equipment suppliers. Our bandwidth creation products
increase the performance and capacity of fiber optic networks. Our bandwidth
management products provide communications service providers with the ability to
monitor and manage optical signals to enhance network performance. We produce
components for next-generation, all-optical dense wavelength division
multiplexing (DWDM), optical amplification, switching and routing, and
ultra-high reliability undersea use. We were incorporated in September 1995 and
reincorporated in Delaware in September 2000. We began shipping product for sale
in the second half of 1996. In April 1999, we established manufacturing
operations in China.

   We generate revenues from the sale of fiber optic components and integrated
optical subsystems. To date, we have developed over 100 standard products that
are sold or integrated into customized solutions for our customers. Our products
are generally categorized into the following major groups: our bandwidth
creation products which include wavelength expansion and optical amplification
products; and our bandwidth management products which include wavelength
performance monitoring and protection, and optical switching products. A
majority of our revenues are derived from our wavelength expansion products, in
particular, DWDMs, multiplexers used primarily in optical amplification and
amplification components.

    We depend upon a small number of customers for a substantial portion of our
revenues. Our top five customers together accounted for 51.0% of our revenues in
the three months ended September 30, 2001. Marubun Corporation, Cisco and
Corning each accounted for revenues greater than 10% for the three months ended
September 30, 2001. We expect that we will continue to depend upon a small
number of customers, although most likely not the same customers, for a
substantial portion of our revenues.


                                       11

<PAGE>

Results of Operations

    Revenues. Revenues decreased $22.3 million, or 69%, from $32.3 million for
the three months ended September 30, 2000 to $10.0 million for the three months
ended September 30, 2001. This decrease was primarily due to decreased shipments
of our existing wavelength expansion products, optical amplification products
and optical switching products to existing and new customers. We expect our
revenues for the second quarter of fiscal 2002 to remain flat compared to
revenues achieved during the first quarter of fiscal 2002.

    Gross Profit (Loss). Gross profit (loss), excluding the $10.4 million excess
inventory charge and $426,000 non-cash compensation benefit for the three months
ended September 2001 and $1.4 million non-cash compensation expense for the
three months ended September 2000, decreased $9.7 million, or 126%, from gross
profit of $7.7 million for the three months ended September 30, 2000 to a gross
loss of $2.0 million for the three months ended September 30, 2001. This
resulted in a decrease in gross margin from 24% to (20)%. The decrease in our
gross margin was primarily due to higher manufacturing costs relative to our
production volume, manufacturing inefficiencies associated with the transfer of
our manufacturing capacity and lower yields in our manufacturing facilities in
China. These decreases were partially offset by the cost benefits of
manufacturing in China. Manufacturing overhead costs, excluding the excess
inventory charge and non-cash compensation benefit, increased $2.0 million for
the three months ended September 30, 2001 compared to the same period in the
prior fiscal year. Gross profit (loss), including the $10.4 million excess
inventory charge and non-cash compensation benefit of $426,000 for the three
months ended September 2001 and $1.4 million non-cash compensation expense for
the three months ended September 2000, decreased $18.3 million, or 289%, from
$6.3 million for the three months ended September 30, 2000 to $(12.0) million
for the three months ended September 30, 2001. This resulted in a decrease in
gross margin from 20% to (120)%. The excess inventory charge reflects the recent
significant downturn in customer demand. In response to this downturn, we are
focusing on transitioning substantially all of our manufacturing to China by the
fourth quarter of calendar 2001. We cannot assure you that this transition will
result in improved gross margins due to the cost benefits of manufacturing in
China. We are continuing to implement programs to further improve production
yields of our products. We cannot assure you that these programs will be
successful in increasing our gross margin. We expect our gross margin, excluding
the excess inventory charge and non-cash compensation benefit, to break even as
a percentage of revenues, for the next fiscal quarter.

   Research and Development. Research and development expenses, excluding
non-cash compensation expense, increased $135,000, or 4%, from $3.6 million for
the three months ended September 30, 2000 to $3.8 million for the three months
ended September 30, 2001. Research and development expenses were primarily due
to personnel and personnel-related costs, prototype expenses for the design and
development of new products as well as significant improvements to existing
products, depreciation expense and occupancy costs. Research and development
expenses, including non-cash compensation expense, decreased $1.2 million, or
23%, from $5.0 million for the three months ended September 30, 2000 to $3.8
million for the three months ended September 30, 2001. We expect our research
and development expenses to remain relatively flat in dollar amount and as a
percentage of revenues for the next fiscal quarter as we continue to develop new
products and improve existing products.

    Sales and Marketing. Sales and marketing expenses, excluding non-cash
compensation expense, decreased $416,000, or 18%, from $2.4 million for the
three months ended September 30, 2000 to $2.0 million for the three months ended
September 30, 2001. The decrease in sales and marketing expenses was primarily
due to lower commissions to our internal and external sales representatives
associated with decreased revenues partially offset by an increase in sales and
marketing personnel and personnel-related


                                       12

<PAGE>

costs and occupancy costs. Sales and marketing expenses, including non-cash
compensation expense, decreased $908,000, or 31%, from $3.0 million for the
three months ended September 30, 2000 to $2.1 million for the three months ended
September 30, 2001. We expect our sales and marketing expenses to decrease in
dollar amount and as a percentage of revenues for the next fiscal quarter as a
result of our cost-cutting efforts.

    General and Administrative. General and administrative expenses, excluding
non-cash compensation expense, decreased $497,000, or 18%, from $2.7 million for
the three months ended September 30, 2000 to $2.2 million for the three months
ended September 30, 2001. The decrease in general and administrative expenses
was primarily due to lower costs associated with personnel and personnel-related
costs partially offset by start up costs in China, legal fees and costs
associated with the reporting requirements of a public company. General and
administrative expenses, including non-cash compensation expense, decreased $5.0
million, or 62%, from $8.1 million for the three months ended September 30, 2000
to $3.0 million for the three months ended September 30, 2001. We expect our
general and administrative expenses to decrease in dollar amount and as a
percentage of revenues for the next fiscal quarter as a result of our
cost-cutting efforts.

   Non-Cash Compensation Expense. From July 1, 1998 through September 30, 2001,
we recorded an aggregate of $58.1 million in deferred non-cash compensation, net
of cancellations. Non-cash compensation expense decreased $8.1 million, or 93%,
from $8.7 million for the three months ended September 30, 2000 to $624,000 for
the three months ended September 30, 2001.

   Restructuring Costs and Other Special Charges. We, like many of our peers in
the communications industry, continue to be affected by the slowdown in
telecommunications equipment spending. Our revenues decreased from $43.2 million
in the fiscal quarter ended December 31, 2000 to $36.0 million in the fiscal
quarter ended March 31, 2001, to $20.3 million in the fiscal quarter ended June
30, 2001 and to $10.0 million in the fiscal quarter ended September 30, 2001.
Due to the continued weakness in the general economy, and the telecom sector in
particular, year-over-year revenue growth is expected to be negative compared to
the fiscal year ended June 30, 2001, putting downward pressure on margins and
profits. Due to this decline in current business conditions, we began
implementing our plan to restructure our business during the quarters ended
September 30, 2001 and June 30, 2001 and realigned resources to focus on
monitoring costs, preserving cash, accelerating our planned move of
manufacturing operations to China and focusing on core opportunities. A
restructuring charge of $25.6 million was recorded for excess fixed assets,
non-cancelable purchase obligations, worldwide workforce reduction and
consolidation of excess facilities in the fiscal quarter ended September 30,
2001. Additionally, the Company recorded a provision for excess inventory
totaling $10.4 million, which was charged to cost of sales during the fiscal
quarter ended September 30, 2001.

    Interest and Other Income, Net. Interest and other income, net increased
$1.6 million from $12,000 for the three months ended September 30, 2000 to $1.6
million for the three months ended September 30, 2001. The increase in interest
income is due to larger cash balances from the proceeds of our initial public
offering in October 2000 and the investment of a portion of those proceeds in
higher yielding commercial paper during the three months ended September 30,
2001 offset by interest expense on the convertible note payable to Cisco Systems
and capital lease obligations.

    Provision for Income Taxes. We have deferred tax assets of $18.0 million as
of September 30, 2001 and a corresponding valuation allowance that reduces the
gross deferred tax assets to zero, an amount that management believes will more
likely than not be realized. In assessing the realizability of deferred tax
assets, management recorded a valuation allowance to the extent the Company does
not have a carryback


                                       13

<PAGE>

right. Based on the Company's history of losses and uncertainty of generating
future taxable income, the realizable portion of the deferred tax assets is
equal only to the amount of income tax expense expected to be paid during fiscal
2002, which is zero, and represents the amount that management believes will
more likely than not be realizable based on current available objective
evidence.

Liquidity and Capital Resources

    Since our inception, we have financed our operations primarily through
issuances of equity, which totaled approximately $319.4 million in aggregate net
proceeds and proceeds from exercise of stock options, employee stock purchase
plan and warrants which totaled approximately $5.9 million through September 30,
2001. In August 2000, we received $50.0 million in connection with the issuance
to Cisco Systems of a convertible promissory note, which automatically converted
into 3,298,773 shares of common stock upon the closing of our initial public
offering in October 2000. Our initial public offering resulted in net proceeds
of approximately $263.7 million, before offering expenses of approximately $2.7
million. As of September 30, 2001, we had cash, cash equivalents and short-term
investments of $239.5 million and working capital of $228.8 million.

    Our operating activities used cash of $5.9 million in the three months ended
September 30, 2001. Cash used in operating activities was primarily attributable
to a net loss incurred during the three months ended September 30, 2001 of $45.0
million and a decrease in accounts payable of $7.2 million. These amounts were
partially offset by decreases in accounts receivable of $5.3 million,
inventories of $2.1 million, prepaid expenses of $4.9 million, an increase in
accrued liabilities of $3.2 million, provision for excess and obsolete inventory
of $10.4 million, restructuring costs and other special charges of $16.3
million, depreciation and amortization expense of $3.5 million and non-cash
compensation expense of $624,000.

    Our investing activities used cash of $27.7 million in the three months
ended September 30, 2001 primarily due to the purchase of short-term investments
of $26.1 million and property and equipment of $1.6 million. During the
remaining nine months of fiscal 2002, we expect to use approximately $6.0
million for the purchase of property and equipment worldwide. We expect to use
cash generated from our initial public offering for these expenditures.

    Our financing activities provided cash of $406,000 in the three months ended
September 30, 2001 primarily from proceeds from the issuance of common stock of
$53,000 and borrowings under our line of credit of $1.3 million partially offset
by repayment of lease obligations of $915,000.

    Our principal source of liquidity at September 30, 2001 consisted of $239.5
million in cash, cash equivalents and short-term investments. We believe that
our current cash, cash equivalents and short-term investments balance and any
cash generated from operations, will be sufficient to meet our operating and
capital requirements for at least the next 12 months. We may use cash, cash
equivalents and short-term investments from time to time to fund our acquisition
of businesses and technologies. We may be required to raise funds through public
or private financings, strategic relationships or other arrangements. We cannot
assure you that such funding, if needed, will be available on terms attractive
to us, or at all. Furthermore, any additional equity financing may be dilutive
to stockholders, and debt financing, if available, may involve restrictive
covenants. Our failure to raise capital when needed could harm our ability to
pursue our business strategy and achieve and maintain profitability.


                                       14

<PAGE>

Recent Accounting Pronouncements

   In July 2001, the FASB issued SFAS No. 141, "Business Combinations." SFAS No.
141 requires the purchase method of accounting for business combinations
initiated after June 30, 2001 and eliminates the pooling-of-interests method.

   In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets," which is effective for fiscal years beginning after March 15, 2001.
SFAS No. 142 requires, among other things, the discontinuance of goodwill
amortization. In addition, the standard includes provisions upon adoption for
the reclassification of certain existing recognized intangibles as goodwill,
reassessment of the useful lives of existing recognized intangibles,
reclassification of certain intangibles out of previously reported goodwill and
the testing for impairment of existing goodwill and other intangibles. The
Company does not believe that the adoption of SFAS No. 142 will have a material
impact on our financial position, results of operations or cash flows.

   In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets". FAS 144 supercedes FAS 121 and applies to all
long-lived assets (including discontinued operations) and consequently amends
Accounting Principles Board Opinion No. 30 (APB 30), "Reporting Results of
Operations Reporting the Effects of Disposal of a Segment of a Business". FAS
144 develops one accounting model (based on the model in FAS 121) for long-lived
assets that are to be disposed of by sale, as well as addresses the principal
implementation issues. FAS 144 requires that long-lived assets that are to be
disposed of by sale be measured at the lower of book value or fair value less
cost to sell. That requirement eliminates APB 30's requirement that discontinued
operations be measured at net realizable value or that entities include under
"discontinued operations" in the financial statements amounts for operating
losses that have not yet occurred. Additionally, FAS 144 expands the scope of
discontinued operations to include all components of an entity with operations
that (1) can be distinguished from the rest of the entity and (2) will be
eliminated from the ongoing operations of the entity in a disposal transaction.
We do not believe that the adoption of SFAS No. 144 will have a material impact
on our financial position, results of operations or cash flows.

Risk Factors

WE HAVE INCURRED SIGNIFICANT LOSSES, AND OUR FAILURE TO INCREASE OUR REVENUES
COULD PREVENT US FROM ACHIEVING PROFITABILITY.

    We have incurred significant losses since our inception in 1995 and expect
to incur losses in the future. We incurred net losses of $45.0 million for the
fiscal quarter ended September 30, 2001 and $80.4 million, $24.9 million and
$3.5 million for the fiscal years ended June 30, 2001, 2000 and 1999,
respectively. We have not achieved profitability on a quarterly basis. As of
September 30, 2001, we had an accumulated deficit of $157.9 million. We will
need to generate significantly greater revenues while containing costs and
operating expenses to achieve profitability. Our revenues may not grow in future
quarters, and we may never generate sufficient revenues to achieve
profitability.

WE DEPEND UPON A SMALL NUMBER OF CUSTOMERS FOR A SUBSTANTIAL PORTION OF OUR
REVENUES, AND ANY DECREASE IN REVENUES FROM, OR LOSS OF, THESE CUSTOMERS WITHOUT
A CORRESPONDING INCREASE IN REVENUES FROM OTHER CUSTOMERS WOULD HARM OUR
OPERATING RESULTS.


                                       15

<PAGE>

   We depend upon a small number of customers for a substantial portion of our
revenues. Our top five customers together accounted for 51.0% in the three
months ended September 30, 2001. Marubun Corporation, Cisco and Corning each
accounted for revenues greater than 10% for the three months ended September 30,
2001. We expect that we will continue to depend upon a small number of
customers, although most likely not the same customers, for a substantial
portion of our revenues.

    Our revenues generated from these customers, individually or in the
aggregate, may not reach or exceed historic levels in any future period. For
example, we may not be the sole source of supply to our customers, and they may
choose to purchase products from other vendors. Furthermore, the businesses of
our existing customers are experiencing a downturn, which is resulting, in some
instances, in significantly decreased sales to these customers and harming our
results of operations. Loss or cancellations of orders from, or any further
downturn in the business of, any of our customers could harm our business. Our
dependence on a small number of customers may increase if the optical components
industry and our target markets continue to consolidate.

BECAUSE WE DID NOT COMMENCE SALES OF OUR PRODUCTS UNTIL LATE 1996 AND ONLY
RECENTLY BEGAN SELLING OUR PRODUCTS IN LARGE VOLUME, WE MAY BE UNABLE TO
ACCURATELY FORECAST OUR REVENUES, AND OUR QUARTERLY REVENUES AND OPERATING
RESULTS MAY CONTINUE TO FLUCTUATE SIGNIFICANTLY FROM QUARTER TO QUARTER.

    We did not commence sales of our products until late 1996 and only recently
began selling our products in large volume. As a result, it is difficult to
forecast our revenues accurately. Moreover, our revenues, expenses and operating
results have varied significantly from quarter to quarter in the past and may
continue to fluctuate significantly in the future. The factors, many of which
are more fully discussed in other risk factors, that are likely to cause these
variations include, among others:

   o economic downturn of the fiber optic industry;

   o economic conditions specific to the communications and related industries
     and the development and size of the markets for our products;

   o fluctuations in demand for, and sales of, our products;

   o cancellations of orders and shipment rescheduling;

   o our ability to successfully move our manufacturing capacity to our
     facilities in China;

   o the availability of raw materials used in our products and increases in the
     price of these raw materials;

   o the ability of our manufacturing operations in China to timely produce and
     deliver products and components in the quantity and of the quality we
     require;

   o our ability to achieve acceptable production yields;

   o the practice of communication equipment suppliers to sporadically place
     large orders with short lead times;


                                       16

<PAGE>

   o the mix of products and the average selling prices of the products we sell;

   o competitive factors, including introductions of new products and product
     enhancements by competitors, entry of new competitors into the optical
     networking components market and pricing pressures;

   o our ability to develop, introduce, manufacture and ship new and enhanced
     optical networking products in a timely manner without defects; and

   o costs associated with and the outcomes of any intellectual property or
     other litigation to which we are, or may become, a party.

    Due to the factors noted above and other risks discussed in this section, we
believe that quarter-to-quarter comparisons of our operating results will not be
meaningful. You should not rely on our results for one quarter as any indication
of our future performance. Quarterly variations in our operations have resulted
in significant volatility in our stock price and the market price for our common
stock might continue to fall. It is likely that, in future quarters, our
operating results may be below the expectations of securities analysts or
investors. If this occurs, the price of our common stock is likely to continue
to decrease.

BECAUSE A HIGH PERCENTAGE OF OUR EXPENSES IS FIXED IN THE SHORT TERM, OUR
OPERATING RESULTS ARE LIKELY TO BE HARMED IF WE EXPERIENCE FURTHER DELAYS IN
GENERATING AND RECOGNIZING REVENUES.

    A high percentage of our expenses, including those related to manufacturing,
engineering, research and development, sales and marketing and general and
administrative functions, are fixed in the short term. As a result, if we
experience further delays in generating and recognizing revenues, our quarterly
operating results are likely to be harmed. For example, we experienced such
delays in the third and fourth quarter of fiscal 2001 and the first quarter of
fiscal 2002, and our loss from operations increased 45.8%, 12.7% and 47.5%,
respectively, from the immediately preceding quarters. As we move our
manufacturing capacity to China, we will incur expenses in one quarter relating
to the move that may not result in off-setting revenues until a subsequent
quarter. New product introductions can also result in a mismatching of research
and development expenses and sales and marketing expenses that are incurred in
one quarter with revenues that are not recognized until a subsequent quarter
when the new product is introduced. If growth in our revenues does not exceed
the increase in our expenses, our results of operations will be harmed.

IF WE FAIL TO EFFECTIVELY MONITOR OUR MANUFACTURING CAPACITY, WE MAY NOT BE ABLE
TO DELIVER SUFFICIENT QUANTITIES OF PRODUCTS TO OUR CUSTOMERS IN A TIMELY
MANNER, WHICH WOULD HARM OUR OPERATING RESULTS.

     We manufacture all of our products in our facilities in San Jose,
California and Fuzhou, Shanghai and Zhuhai, China and currently are moving
substantially all of our manufacturing capacity to our Zhuhai facility. Our
facilities in Beijing and Chengdu are idle and along with our Fuzhou facility
will be closed in accordance with our restructuring plans. We must devote
significant resources to move our manufacturing capacity to China, and our
planned move will be expensive, will require management's time and may disrupt
our operations. Additional risks associated with moving our manufacturing
capacity include:


                                       17

<PAGE>

   o a lack of availability of qualified management and manufacturing personnel;

   o difficulties in achieving adequate yields from new manufacturing lines;

   o inability to quickly implement an adequate set of financial controls to
     track levels of inventory; and

   o our inability to procure the necessary raw materials and equipment.

    Communications equipment suppliers typically require that their vendors
commit to provide specified quantities of products over a given period of time.
We could be unable to pursue many large orders if we do not have sufficient
manufacturing capacity to enable us to commit to provide customers with
specified quantities of products. If we are unable to commit to deliver
sufficient quantities of our products to satisfy a customer's anticipated needs,
we will lose the order and the opportunity for significant sales to that
customer for a lengthy period of time. Furthermore, if we fail to fulfill orders
to which we have committed, we will lose revenue opportunities and our customer
relationships may be harmed.

IF WE FAIL TO EFFECTIVELY MANAGE OUR OPERATIONS, INCLUDING ANY REDUCTIONS OR
INCREASES IN THE NUMBER OF OUR EMPLOYEES, OUR OPERATING RESULTS COULD BE HARMED.

      Primarily as a result of the recent economic downturn and slowdown in
capital spending, particularly in the communications industry, we recently
implemented a number of cost-cutting measures, including reductions in our
workforce. The impact of these cost-cutting measures, combined with the
challenges of managing our geographically-dispersed operations, has placed, and
will continue to place, a significant strain on our management systems and
resources. In addition, our ability to effectively manage our operations will be
challenged to the extent that we begin expanding our workforce. We expect that
we will need to continue to improve our financial and managerial controls,
reporting systems and procedures, and will need to continue to train and manage
our workforce worldwide. Any failure to effectively manage our operations could
harm our operating results.

IF WE FAIL TO EFFECTIVELY MANAGE OUR INVENTORY LEVELS, OUR OPERATING RESULTS
COULD BE HARMED.

   Because we experience long lead times for raw materials and are often
required to purchase significant amounts of raw materials far in advance of
product shipments, we may not effectively manage our inventory levels, which
could harm our operating results. For example, in the three months ended
September 30, 2001 and the fiscal year ended June 30, 2001, we recorded a $10.4
million and a $30.6 million, respectively, provision for excess and obsolete
inventory due to the downturn in the fiber optics industry and our gross margin,
excluding non-cash compensation expense, decreased to (123.8)% for the three
months ended September 30, 2001 from 8.3% for the fiscal year ended June 30,
2001. If we underestimate our requirements, we may have inadequate inventory,
which could result in delays in shipments and loss of customers. If we purchase
raw materials in anticipation of orders that do not materialize, we will have to
carry or write off excess inventory and our gross margins will decline. Even if
we receive these orders, the additional manufacturing capacity that we add to
meet customer requirements may be underutilized in a subsequent quarter. We are
implementing a new automated manufacturing management system to replace our
current system that tracks most of our data, including some inventory levels,
manually. The conversion from the current systems used in San Jose occurred in
the fourth quarter of fiscal 2001, and the conversion in China is anticipated to
take place in the second


                                       18

<PAGE>

quarter of fiscal 2002. Failure to effectively transition to this new system in
China could harm our results. The current limitations of our manufacturing
management systems increase the risk that we may fail to effectively manage our
inventory. In this regard, we experienced significant increases in provisions
for excess and obsolete inventory, which harmed our gross margins, through the
first fiscal quarter of 2002 and fiscal year 2001.

BECAUSE WE DEPEND ON THIRD PARTIES TO SUPPLY SOME OF OUR RAW MATERIALS AND
EQUIPMENT, WE MAY NOT BE ABLE TO OBTAIN SUFFICIENT QUANTITIES OF THESE MATERIALS
AND EQUIPMENT, WHICH COULD LIMIT OUR ABILITY TO FILL CUSTOMER ORDERS AND HARM
OUR OPERATING RESULTS.

    We depend on third parties to supply the raw materials and equipment we use
to manufacture our products. To be competitive, we must obtain from our
suppliers, on a timely basis, sufficient quantities of raw materials at
acceptable prices. We obtain most of our critical raw materials from a single or
limited number of suppliers and generally do not have long-term supply contracts
with them. As a result, our suppliers could terminate the supply of a particular
material at any time without penalty. Difficulties in obtaining raw materials in
the future may limit our product shipments.

    Some of our raw material suppliers are single sources, and finding
alternative sources may involve significant expense and delay, if these sources
can be found at all. For example, all of our GRIN lenses, which are incorporated
into substantially all of our products, are obtained from Nippon Sheet Glass,
the sole supplier worldwide of GRIN lenses. Our failure to obtain these
materials or other single or limited-source raw materials could delay or reduce
our product shipments, which could result in lost orders, increase our costs,
reduce our control over quality and delivery schedules and require us to
redesign our products. If a significant supplier became unable or unwilling to
continue to manufacture or ship materials in required volumes, we would have to
identify and qualify an acceptable replacement. A material delay or reduction in
shipments, any need to identify and qualify replacement suppliers or any
significant increase in our need for raw materials that cannot be met on
acceptable terms could harm our business.

    We also depend on a limited number of manufacturers and vendors that make
and sell the complex equipment we use in our manufacturing process. In periods
of high market demand, the lead times from order to delivery of this equipment
could be as long as six months. Delays in the delivery of this equipment or
increases in the cost of this equipment could harm our operating results.

OUR MARKETS ARE HIGHLY COMPETITIVE, AND IF WE ARE UNABLE TO COMPETE SUCCESSFULLY
OUR REVENUES COULD DECLINE, WHICH WOULD HARM OUR OPERATING RESULTS.

    The market for fiber optic components is intensely competitive. We believe
that our principal competitors are the major manufacturers of optical components
and subsystems, including vendors selling to third parties and business
divisions within communications equipment suppliers. Our principal competitors
in the components market include Avanex Corporation, Corning, DiCon Fiberoptics,
Furukawa Electrical, New Focus, Nortel, Sumitomo, Tyco Electronics and JDS
Uniphase. We believe that we primarily compete with diversified suppliers, such
as Corning, JDS Uniphase and Nortel, for the majority of our product line and to
a lesser extent with niche players that offer more limited product lines.
Competitors in any portion of our business may also rapidly become competitors
in other portions of our business. In addition, our industry has recently
experienced significant consolidation, and we anticipate that further
consolidation will occur. This consolidation has further increased competition.


                                       19

<PAGE>

    Many of our current and potential competitors have significantly greater
financial, technical, marketing, purchasing, manufacturing and other resources
than we do. As a result, these competitors may be able to respond more quickly
to new or emerging technologies and to changes in customer requirements, to
devote greater resources to the development, promotion and sale of products, or
to deliver competitive products at lower prices.

    Several of our existing and potential customers are also current and
potential competitors of ours. These companies may develop or acquire additional
competitive products or technologies in the future and thereby reduce or cease
their purchases from us. In light of the consolidation in the optical networking
industry, we also believe that the size of the optical component and module
suppliers will become increasingly important to our current and potential
customers in the future. We may not be able to compete successfully with
existing or new competitors, and the competitive pressures we face may result in
lower prices for our products, loss of market share, or reduced gross margins,
any of which could harm our business.

    New technologies are emerging due to increased competition and customer
demand. The introduction of new products incorporating new technologies or the
emergence of new industry standards could make our existing products
noncompetitive. For example, new technologies are being developed in the design
of wavelength division multiplexers that compete with the thin film filters that
we incorporate in our products. These technologies include arrayed waveguide
grating, or AWG, and fiber bragg grating, or FBG. If our competitors adopt new
technologies before we do, we could lose market share and our business would
suffer.

A MAJORITY OF OUR MANUFACTURING OPERATIONS ARE LOCATED IN CHINA, WHICH EXPOSES
US TO THE RISK THAT OUR FAILURE TO COMPLY WITH THE LAWS AND REGULATIONS OF
CHINA, OR EVENTS IN THAT COUNTRY, WILL DISRUPT OUR OPERATIONS.

    A majority of our manufacturing operations are located in China and are
subject to the laws and regulations of China. We anticipate that substantially
all of our manufacturing operations will be located in China in the near future.
Our operations in China may be adversely affected by changes in the laws and
regulations of China, such as those relating to taxation, import and export
tariffs, environmental regulations, land use rights, property and other matters.
China's central or local government may impose new, stricter regulations or
interpretations of existing regulations, which would require additional
expenditures. China's economy differs from the economies of many countries in
terms of structure, government involvement, level of development, growth rate,
capital reinvestment, allocation of resources, self-sufficiency and rate of
inflation, among others. Our results of operations and financial condition may
be harmed by changes in the political, economic or social conditions in China.

    In addition, events out of our control in China, such as political unrest,
terrorism, war, labor strikes and work stoppages, could disrupt our operations.
There currently is political tension between the United States and China, which
could lead to a breakdown in trade relations. There is also significant tension
between China and Taiwan, which could result in hostilities. Additionally, China
has stepped up its condemnation of the United States' pledge of military support
to Taiwan, which could lead to hostilities. If hostilities or other events cause
a disruption in our operations, it would be difficult for us to establish
manufacturing operations at an alternative location on comparable terms.


                                       20

<PAGE>

DISRUPTION TO COMMERCIAL ACTIVITIES IN THE UNITED STATES OR IN OTHER COUNTRIES
MAY ADVERSELY IMPACT OUR RESULTS OF OPERATIONS, OUR ABILITY TO RAISE CAPITAL OR
OUR FUTURE GROWTH.

    Our operations in the United States and China also expose us to the
following general risks associated with international operations:

   o disruptions to commercial activities or damage to our facilities as a
     result of political unrest, war, terrorism, labor strikes and work
     stoppages;

   o difficulties and costs of staffing and managing foreign operations with
     personnel who have expertise in optical network technology;

   o unexpected changes in regulatory or certification requirements for optical
     systems or networks;

   o disruptions in the transportation of our products and other risks related
     to the infrastructure of foreign countries;

   o fluctuations in the value of currencies; and

   o economic instability.

OUR WAVELENGTH EXPANSION PRODUCTS HAVE ACCOUNTED FOR A MAJORITY OF OUR REVENUES,
AND OUR REVENUES COULD BE HARMED IF THE PRICE OF OR DEMAND FOR THESE PRODUCTS
FURTHER DECLINES OR IF THESE PRODUCTS FAIL TO ACHIEVE BROADER MARKET ACCEPTANCE.

   Although we currently offer a broad spectrum of products, sales of our
wavelength expansion products accounted for a majority of our revenues in the
three months ended September 30, 2001 and fiscal years ended June 30, 2001 and
2000. These products include, among others, dense wavelength division
multiplexers, or DWDMs and multiplexers, used primarily in optical amplification
and amplification components. These products accounted for 59%, 57% and 81% of
our revenues in the three months ended September 30, 2001 and fiscal years ended
June 30, 2001 and 2000, respectively. We believe that our future growth and a
significant portion of our future revenues will depend on the commercial success
of our wavelength expansion products. Customers that have purchased wavelength
expansion products may not continue to purchase these products from us. Any
decline in the price of, or demand for, our wavelength expansion products, or
their failure to achieve broader market acceptance, could harm our revenues.

THE OPTICAL NETWORKING COMPONENT INDUSTRY IS EXPERIENCING DECLINING AVERAGE
SELLING PRICES, WHICH COULD CAUSE OUR GROSS MARGINS TO DECLINE AND HARM OUR
OPERATING RESULTS.

    The optical networking component industry is experiencing declining average
selling prices, or ASPs, as a result of increasing competition and declining
market demand. We anticipate that ASPs will continue to decrease in the future
in response to product introductions by competitors, price pressures from
significant customers and greater manufacturing efficiencies achieved through
increased automation in the manufacturing process. These ASP declines have
contributed and may continue to contribute to a decline in our gross margins,
which could harm our results of operations.


                                       21

<PAGE>

OUR FAILURE TO ACHIEVE ACCEPTABLE MANUFACTURING YIELDS IN A COST-EFFECTIVE
MANNER COULD DELAY PRODUCT SHIPMENTS TO OUR CUSTOMERS AND HARM OUR OPERATING
RESULTS.

    Because manufacturing our products involves complex and precise processes
and the majority of our manufacturing costs are relatively fixed, manufacturing
yields are critical to our results of operations. Lower than expected
manufacturing yields could delay product shipments and harm our operating
results. Factors that affect our manufacturing yields include the quality of raw
materials used to make our products, quality of workmanship and our
manufacturing processes. Our or our suppliers' inadvertent use of defective
materials could significantly reduce our manufacturing yields. Furthermore,
because of the large labor component in and complexity of the manufacturing
process, quality of workmanship is critical to achieving acceptable yields. We
cannot assure you that we will be able to hire and train a sufficient number of
qualified personnel to cost-effectively produce our products with the quality
and in the quantities required by our customers. Changes in our manufacturing
processes or those of our suppliers could also impact our yields. In some cases,
existing manufacturing techniques, which involve substantial manual labor, may
not allow us to cost-effectively meet our manufacturing yield goals so that we
maintain acceptable gross margins while meeting the cost targets of our
customers. We will need to develop new manufacturing processes and techniques
that will involve higher levels of automation in order to increase our gross
margins and help achieve the targeted cost levels of our customers. We may not
achieve manufacturing cost levels that will allow us to achieve acceptable gross
margins or fully satisfy customer demands.

OUR PRODUCTS MAY HAVE DEFECTS THAT ARE NOT DETECTED UNTIL FULL DEPLOYMENT OF A
CUSTOMER'S EQUIPMENT, WHICH COULD RESULT IN A LOSS OF CUSTOMERS, DAMAGE TO OUR
REPUTATION AND SUBSTANTIAL COSTS.

    Our products are deployed in large and complex optical networks and must be
compatible with other system components. Our products can only be fully tested
for reliability when deployed in networks for long periods of time. Our
customers may discover errors, defects or incompatibilities in our products
after they have been fully deployed and operated under peak stress conditions.
Our products may also have errors, defects or incompatibilities that are not
found until after a system upgrade is installed. Errors, defects,
incompatibilities or other problems with our products could result in:

   o loss of customers;

   o loss of or delay in revenues;

   o loss of market share;

   o damage to our brand and reputation;

   o inability to attract new customers or achieve market acceptance;

   o diversion of development resources;

   o increased service and warranty costs;

   o legal actions by our customers; and


                                       22

<PAGE>

   o increased insurance costs.

   If any of these occur, our operating results could be harmed.

IF WE ARE UNABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY, OUR ABILITY TO SUCCEED
WILL BE HARMED.

     Our ability to compete successfully and achieve future growth will depend,
in part, on our ability to protect our proprietary technology. We rely on a
combination of patent, copyright, trademark, and trade secret laws and
restrictions on disclosure to protect our intellectual property rights. However,
the steps we have taken may not prevent the misappropriation of our intellectual
property, particularly in foreign countries, such as China, where the laws may
not protect our proprietary rights as fully as in the United States. We
currently hold 26 patents and have 35 pending patent applications in the United
States. We cannot assure you that patents will be issued from pending or future
applications or that, if patents are issued, they will not be challenged,
invalidated or circumvented. Rights granted under these patents may not provide
us with meaningful protection or any commercial advantage. If we are unable to
protect our proprietary technology, our ability to succeed will be harmed. We
may in the future initiate claims or litigation against third parties for
infringement of our proprietary rights. These claims could result in costly
litigation and the diversion of our technical and management personnel.

WE MAY BE INVOLVED IN INTELLECTUAL PROPERTY DISPUTES IN THE FUTURE, WHICH WILL
DIVERT MANAGEMENT'S ATTENTION AND COULD CAUSE US TO INCUR SIGNIFICANT COSTS AND
PREVENT US FROM SELLING OR USING THE CHALLENGED TECHNOLOGY.

     Participants in the communications and optical components markets in which
we sell our products have experienced frequent litigation regarding patent and
other intellectual property rights. Numerous patents in these industries are
held by others, including our competitors and academic institutions. We have no
means of knowing that a patent application has been filed in the United States
until the patent is issued. Optical component suppliers may seek to gain a
competitive advantage or other third parties may seek an economic return on
their intellectual property portfolios by making infringement claims against us.

      In June 2000, Chorum Technologies, LP filed a lawsuit against us and our
wholly-owned subsidiary, Telelight Communication Inc., in the United States
District Court for the Northern District of Texas alleging, among other things,
infringement of two U.S. patents allegedly owned by Chorum relating to fiber
optical interleaving, based on our manufacture of and offer to sell various
fiber optic interleaver products. On May 7, 2001, the Company filed a lawsuit
against Chorum in the United States District Court for the District of Delaware,
alleging, among other matters, that Chorum infringes one of our patents relating
to fiber optic couplers based on Chorum's manufacture of and offer to sell
various DWDM products.

    In October 2001, we reached an agreement with Chorum LP and its affiliates
to dismiss the patent infringement litigation between the companies without
prejudice. We cannot assure you that Chorum or Oplink will not in the future
elect to refile the prior patent infringement actions or file new patent
infringement actions against the other.


                                       23

<PAGE>

    Both prosecuting or defending any lawsuit to which we may become a party in
the future as a result of alleged infringement of others' intellectual property,
will likely be costly and time consuming and will divert the efforts and
attention of our management and technical personnel. Patent litigation is highly
complex and can extend for a protracted period of time, which can substantially
increase the cost of litigation. Accordingly, the expenses and diversion of
resources associated with any intellectual property litigation to which we may
become a party, could seriously harm our business and financial condition. Any
intellectual property litigation also could invalidate our proprietary rights
and force us to do one or more of the following:

   o 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;

   o stop selling, incorporating or using our products that use the challenged
     intellectual property;

   o pay substantial money damages; or

   o redesign the products that use the technology.

   Any of these actions could result in a substantial reduction in our revenue
and could result in losses over an extended period of time.

WE ARE THE TARGET OF A SECURITIES CLASS ACTION COMPLAINT AND ARE AT RISK OF
SECURITIES CLASS ACTION LITIGATION, WHICH COULD RESULT IN SUBSTANTIAL COSTS AND
DIVERT MANAGEMENT ATTENTION AND RESOURCES.

    In November 2001, a securities class action complaint was filed against us,
the underwriters of our initial public offering, and certain of our directors
and officers in the United States District Court for the Southern District of
New York. The complaint alleges that the underwriters entered into certain
arrangements with investors in connection with our initial public offering, and
that these alleged arrangements should have been and were not disclosed in the
registration statement and prospectus. The complaints seek unspecified monetary
damages and attorneys fees and other costs. This lawsuit, if determined
adversely, could have a material adverse effect on our business.

IF WE ARE UNABLE TO DEVELOP NEW PRODUCTS AND PRODUCT ENHANCEMENTS THAT ACHIEVE
MARKET ACCEPTANCE, SALES OF OUR PRODUCTS COULD DECLINE, WHICH WOULD HARM OUR
OPERATING RESULTS.

    The communications industry is characterized by rapid technological changes,
frequent new product introductions, changes in customer requirements and
evolving industry standards. As a result, our products could quickly become
obsolete as new technologies are introduced and incorporated into new and
improved products. Our future success depends on our ability to anticipate
market needs and to develop products that address those needs. Our failure to
predict market needs accurately or to develop new products or product
enhancements in a timely manner will harm market acceptance and sales of our
products. In this regard, we are currently developing bandwidth creation
products as well as bandwidth management products. If the development of these
products or any other future products takes longer than we anticipate, or if we
are unable to develop and introduce these products to market, our revenues could
suffer and we may not gain market share. Even if we are able to develop and
commercially introduce these new products, the new products may not achieve
widespread market acceptance.


                                       24

<PAGE>

WE DEPEND ON THE CONTINUED GROWTH AND SUCCESS OF THE COMMUNICATIONS INDUSTRY,
WHICH IS EXPERIENCING AN ECONOMIC DOWNTURN, AS WELL AS RAPID CONSOLIDATION AND
REALIGNMENT AND MAY NOT CONTINUE TO DEMAND FIBER OPTIC PRODUCTS AT HISTORICAL
RATES, THEREBY REDUCING DEMAND FOR OUR PRODUCTS AND HARMING OUR OPERATING
RESULTS.

    We depend on the continued growth and success of the communications
industry, including the continued growth of the Internet as a widely-used medium
for commerce and communication and the continuing demand for increased bandwidth
over communications networks. As a result of recent unfavorable economic
conditions and reduced capital spending in the communications industry, our
growth rate may be significantly lower than our historical quarterly growth
rate. For example, during the third and fourth quarter of fiscal 2001 and the
first quarter of fiscal 2002, revenues decreased 16.7%, 43.8% and 50.6%,
respectively, from the immediately preceding quarters primarily due to the
economic downturn in the communications industry. Furthermore, the rate at which
communications service providers and other fiber optic network users have built
new fiber optic networks or installed new systems in their existing fiber optic
networks has fluctuated in the past and these fluctuations may continue in the
future. These fluctuations may result in reduced demand from historical rates
for new or upgraded fiber optic systems that utilize our products and,
therefore, may result in reduced demand for our products.

    The communications industry is also experiencing rapid consolidation and
realignment, as industry participants seek to capitalize on the rapidly changing
competitive landscape developing around the Internet and new communications
technologies such as fiber optic and wireless communications networks. As the
communications industry consolidates and realigns to accommodate technological
and other developments, our customers may consolidate or align with other
entities in a manner that harms our business.

BECAUSE NONE OF OUR CUSTOMERS ARE OBLIGATED TO PURCHASE OUR PRODUCTS, THEY MAY
AND DO CANCEL OR DEFER THEIR PURCHASES ON SHORT NOTICE AND AT ANY TIME, WHICH
COULD HARM OUR OPERATING RESULTS.

    We do not have contracts with our customers that provide any assurance of
future sales, and sales are typically made pursuant to individual purchase
orders, often with extremely short lead times. Accordingly, our customers:

    o may and do stop purchasing our products at any time without penalty;

    o are free to purchase products from our competitors;

    o are not required to make minimum purchases; and

    o may and do cancel orders that they place with us.

    Sales to any single customer may and do vary significantly from quarter to
quarter. Our customers generally do not place purchase orders far in advance. In
addition, our customer purchase orders have varied significantly from quarter to
quarter. This means that customers who account for a significant portion of our
revenues in one quarter may not and do not place any orders in the succeeding
quarter, which makes it difficult to forecast revenue in future periods.
Moreover, our expense levels are based in


                                       25

<PAGE>

part on our expectations of future revenue, and we may be unable to adjust costs
in a timely manner in response to further revenue shortfalls. This can result in
significant quarterly fluctuations in our operating results.

OUR REVENUES AND RESULTS OF OPERATIONS MAY BE HARMED IF WE FAIL TO INCREASE THE
VOLUME OF ORDERS, WHICH WE RECEIVE AND FILL ON A SHORT-TERM BASIS.

    Historically, a substantial portion of our net revenues in any fiscal period
has been derived from orders in backlog. Currently, due to the downturn in the
fiber optics industry, we are substantially dependent upon orders we receive and
fill on a short-term basis. Our customers can generally cancel, reschedule or
delay orders in backlog without obligation to us. As a result, we cannot rely on
orders in backlog as a reliable and consistent source of future revenue. If any
of our customers did in fact cancel or delay these orders, and we were not able
to replace them with new orders for product to be supplied on a short-term
basis, our results of operations could be harmed. For example, during the third
and fourth quarter of fiscal 2001 and the first quarter of fiscal 2002, our
customers both delayed and cancelled some orders in backlog resulting in a
16.7%, 43.8% and 50.6% decrease in revenues, respectively, from the immediately
preceding quarter.

OUR LENGTHY AND VARIABLE QUALIFICATION AND SALES CYCLE MAKES IT DIFFICULT TO
PREDICT THE TIMING OF A SALE OR WHETHER A SALE WILL BE MADE, WHICH MAY HARM OUR
OPERATING RESULTS.

    Our customers typically expend significant efforts in evaluating and
qualifying our products and manufacturing process prior to placing an order.
This evaluation and qualification process frequently results in a lengthy sales
cycle, typically ranging from nine to twelve months and sometimes longer. While
our customers are evaluating our products and before they place an order with
us, we may incur substantial sales, marketing, research and development
expenses, expend significant management efforts, increase manufacturing capacity
and order long lead-time supplies. Even after this evaluation process, it is
possible a potential customer will not purchase our products. In addition,
product purchases are frequently subject to unplanned processing and other
delays, particularly with respect to larger customers for which our products
represent a very small percentage of their overall purchase activity. Long sales
cycles may cause our revenues and operating results to vary significantly and
unexpectedly from quarter to quarter, which could cause volatility in our stock
price.

WE DEPEND ON KEY PERSONNEL TO MANAGE OUR BUSINESS EFFECTIVELY IN A RAPIDLY
CHANGING MARKET, AND IF WE ARE UNABLE TO HIRE ADDITIONAL PERSONNEL, OUR ABILITY
TO SELL OUR PRODUCTS COULD BE HARMED.

    Our future success depends upon the continued services of our executive
officers and other key engineering, finance, sales, marketing, manufacturing and
support personnel. In addition, we depend substantially upon the continued
services of key management personnel at our Chinese subsidiaries. None of our
officers or key employees is bound by an employment agreement for any specific
term, and these personnel may terminate their employment at any time. In
addition, we do not have "key person" life insurance policies covering any of
our employees.

   Our ability to continue to attract and retain highly-skilled personnel will
be a critical factor in determining whether we will be successful in the future.
Competition for highly-skilled personnel is intense, especially in the San
Francisco Bay area. We may not be successful in attracting, assimilating or


                                       26

<PAGE>

retaining qualified personnel to fulfill our current or future needs. Many of
the members of our management team have recently joined our Company. Mr. Bruce
D. Horn, our Chief Financial Officer, joined us in April 2000, Mr. Frederick R.
Fromm, our Chief Executive Officer and President, joined us in July 2000, Mr.
Kenneth W. Brizel, our Senior Vice President of Strategy and Business
Development, joined us in October 2000, Mr. Yanfeng Yang, our Vice President of
Global Manufacturing/Operations, assumed his position in September 2001, and Mr.
Christian A. Lepiane, our Vice President of Worldwide Sales, and Ms. Zeynep
Hakimoglu, our Vice President of Product Line Management both joined us in
November 2001. In addition, members of our management team have recently assumed
new positions within the Company. On November 7, 2001, Mr. Fromm became our
Chief Executive Officer. Our former Chief Executive Officer, Mr. Joseph Y. Liu,
became Chairman of the Board of Directors. The changes were in accordance with
our planned succession strategy. If our management team does not work
effectively together, it could seriously harm our business.

BECAUSE SOME OF OUR THIRD-PARTY SALES REPRESENTATIVES AND DISTRIBUTORS CARRY
PRODUCTS OF ONE OR MORE OF OUR COMPETITORS, THEY MAY NOT RECOMMEND OUR PRODUCTS
OVER COMPETITORS' PRODUCTS.

    A majority of our revenues are derived from sales through our domestic and
international sales representatives and distributors. Our sales representatives
and distributors are independent organizations that generally have exclusive
geographic territories and generally are compensated on a commission basis. We
are currently migrating some of our larger customers to direct sales and are
increasing our direct sales and marketing staff. We expect that we will continue
to rely on our independent sales representatives and distributors to market,
sell and support many of our products for a substantial portion of our revenues.
Some of our third-party sales representatives and distributors carry products of
one or more of our competitors. As a result, these sales representatives and
distributors may not recommend our products over competitors' products.

BECAUSE SOME OF OUR OPERATIONS ARE LOCATED IN AN AREA EXPERIENCING POWER
SHORTAGES, WE FACE THE RISK OF POWER LOSS, WHICH COULD HARM OUR OPERATIONS.

    Substantial portions of our operations are located in San Jose, California.
Recently California has experienced power shortages and may experience power
shortages in the future. Sustained or frequent power failures could disrupt our
operations, which would limit our ability to supply our products to our
customers in sufficient quantities on a timely basis, harming our customer
relationships.

BECAUSE SOME OF OUR OPERATIONS ARE LOCATED IN ACTIVE EARTHQUAKE FAULT ZONES, WE
FACE THE RISK THAT A LARGE EARTHQUAKE COULD HARM OUR OPERATIONS.

    Substantial portions of our operations are located in San Jose, California,
an active earthquake fault zone. This region has experienced large earthquakes
in the past and may likely experience them in the future. A large earthquake in
the San Jose area could disrupt our operations for an extended period of time,
which would limit our ability to supply our products to our customers in
sufficient quantities on a timely basis, harming our customer relationships.

OUR FAILURE TO COMPLY WITH GOVERNMENTAL REGULATIONS COULD SUBJECT US TO
LIABILITY.


                                       27

<PAGE>

    Our failure to comply with a variety of federal, state and local laws and
regulations in the United States and China could subject us to criminal, civil
and administrative penalties. Our products are subject to U.S. export control
laws and regulations that regulate the export of products and disclosure of
technical information to foreign countries and citizens. In some instances,
these laws and regulations may require licenses for the export of products to,
and disclosure of technology in, some countries, including China, and disclosure
of technology to foreign citizens. While we have received commodity
classifications from the United States Department of Commerce that allow us to
export our current products and disclose our current technologies without export
licenses as we develop and commercialize new products and technologies, and as
the list of products and technologies subject to U.S. export controls changes,
we may be required to obtain export licenses or other approvals with respect to
those products and technologies. We cannot predict whether these licenses and
approvals will be required and, if so, whether they will be granted. The failure
to obtain any required license or approval could harm our business.

    We employ a number of foreign nationals in our U.S. operations and as a
result we are subject to various laws related to the status of those employees
with the Immigration and Naturalization Service. Our failure to comply with the
forgoing laws or any other laws and regulations could subject us to liability.

     In addition, we are subject to laws relating to the storage, use, discharge
and disposal of toxic or otherwise hazardous or regulated chemicals or materials
used in our manufacturing processes. While we believe that we are currently in
compliance in all material respects with these laws and regulations, if we fail
to store, use, discharge or dispose of hazardous materials appropriately, we
could be subject to substantial liability or could be required to suspend or
adversely modify our manufacturing operations. In addition, we could be required
to pay for the cleanup of our properties if they are found to be contaminated,
even if we are not responsible for the contamination.

BECAUSE THE OPTICAL COMPONENTS INDUSTRY IS CAPITAL INTENSIVE, OUR BUSINESS MAY
BE HARMED IF WE ARE UNABLE TO RAISE ANY NEEDED ADDITIONAL CAPITAL.

    The optical components industry is capital intensive, and the transition of
our manufacturing facilities, the development and marketing of new products and
the hiring and retention of personnel will require a significant commitment of
resources. Furthermore, we may continue to incur significant operating losses if
the market for optical networking components develops at a slower pace than we
anticipate, or if we fail to establish significant market share and achieve a
significantly increased level of revenue. If cash from available sources is
insufficient for these purposes, or if additional cash is used for acquisitions
or other unanticipated uses, we may need to raise additional capital. Additional
capital may not be available on terms favorable to us, or at all. If we are
unable to raise additional capital when we require it, our business could be
harmed. In addition, any additional issuance of equity or equity-related
securities to raise capital will be dilutive to our stockholders.

BECAUSE THE OPTICAL COMPONENTS INDUSTRY IS EVOLVING RAPIDLY AND HIGHLY
COMPETITIVE, OUR STRATEGY INVOLVES ACQUIRING OTHER BUSINESSES AND TECHNOLOGIES
TO GROW OUR BUSINESS. IF WE ARE UNABLE TO SUCCESSFULLY INTEGRATE ACQUIRED
BUSINESSES OR TECHNOLOGIES, OUR OPERATING RESULTS MAY BE HARMED.


                                       28

<PAGE>

    The optical components industry is evolving rapidly and is highly
competitive. Accordingly, we have pursued and expect to continue to pursue
acquisitions of businesses and technologies, or the establishment of joint
venture arrangements, that could expand our business. The negotiation of
potential acquisitions or joint ventures, as well as the integration of an
acquired or jointly developed business or technology, could cause diversion of
management's time and other resources or disrupt our operations. Future
acquisitions could result in:

    o additional operating expenses without additional revenues;

    o potential dilutive issuances of equity securities;

    o the incurrence of debt and contingent liabilities;

    o amortization of goodwill and other intangibles;

    o research and development write-offs; and

    o other acquisition-related expenses.

    Furthermore, we may not be able to successfully integrate acquired
businesses or joint ventures with our operations, and we may not receive the
intended benefits of any future acquisition or joint venture.

RISKS RELATED TO OUR COMMON STOCK

IF WE WERE UNABLE TO MAINTAIN OUR NASDAQ NATIONAL MARKET LISTING, THE LIQUIDITY
OF OUR COMMON STOCK WOULD BE SERIOUSLY IMPAIRED.

   If our stock price falls below one dollar for thirty consecutive business
days and we are unable to cure such deficiency, we may be subject to delisting
from the Nasdaq National Market. Delisting from the Nasdaq National Market would
seriously impair the liquidity of our common stock and limit our potential to
raise future capital through the sale of our common stock, which could
materially harm our business. During the three months ended September 30, 2001,
the closing price of our common stock on the Nasdaq National Market ranged from
$0.64 to $3.44. In response to the extraordinary market conditions following the
events of September 11, 2001, The Nasdaq Stock Market, Inc. announced that it
was implementing a moratorium on the Nasdaq National Market listing
requirements, including the minimum bid price requirement. This moratorium will
remain in effect at least through January 2, 2002, after which we may be subject
to delisting if we fail to satisfy the minimum listing requirements.
Additionally, many companies that face delisting as a result of bid prices below
the Nasdaq's maintenance standards seek to maintain their listings by effecting
reverse stock splits. However, reverse stock splits do not always result in a
sustained share price increase. At present, we have made no decision with
respect to this course of action, but will continue to evaluate this alternative
in light of all other options.

THERE MAY BE SALES OF A SUBSTANTIAL AMOUNT OF OUR COMMON STOCK BY OUR
STOCKHOLDERS AND THESE SALES COULD CAUSE OUR STOCK PRICE TO DECLINE.


                                       29

<PAGE>

    At September 30, 2001, our current stockholders held 194,088,588 shares of
our common stock and potentially dilutive common stock equivalents. Potentially
dilutive common stock equivalents are options to purchase an aggregate of
32,647,649 shares.

    Sales of a substantial number of shares of our common stock could cause our
stock price to fall. In addition, the sale of these shares could impair our
ability to raise capital through the sale of additional stock or debt in the
future at a price that we deem appropriate.

INSIDERS CONTINUE TO HAVE SUBSTANTIAL CONTROL OVER US, WHICH MAY NEGATIVELY
AFFECT YOUR INVESTMENT.

    Our current executive officers, directors and their affiliates own, in the
aggregate, as of September 30, 2001, approximately 23.8% of our outstanding
shares. As a result, these persons and/or entities acting together will be able
to substantially influence the outcome of all matters requiring approval by our
stockholders, including the election of directors and approval of significant
corporate transactions. This ability may have the effect of delaying a change in
control, which may be favored by our other stockholders.

BECAUSE OF THE EARLY STAGE OF OUR BUSINESS AND THE RAPID CHANGES TAKING PLACE IN
THE FIBER OPTICS INDUSTRY, WE EXPECT TO EXPERIENCE SIGNIFICANT VOLATILITY IN OUR
STOCK PRICE, WHICH COULD CAUSE YOU TO LOSE ALL OR PART OF YOUR INVESTMENT.

   Because of the early stage of our business and the rapid changes taking place
in the fiber optics industry, we expect the market price of our common stock to
fluctuate significantly. For example, the market price of our common stock has
fluctuated from a high of $37.00 to a low of $0.64 during the period from
October 3, 2000, the date of our initial public offering to September 30, 2001.
These fluctuations may occur in response to a number of factors, some of which
are beyond our control, including:

    o economic downturn in the fiber optics industry;

    o preannouncement of financial results;

    o quarterly variations in our operating results;

    o changes in financial estimates by securities analysts and our failure to
      meet any estimates;

    o changes in market values of comparable companies;

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

    o any loss by us of a major customer;

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

    o additions or departures of key management or engineering personnel; and



                                       30

<PAGE>

    o future sales of our common stock.

    The price of our securities may also be affected by general economic and
market conditions, and the cost of operations in our product markets. While we
cannot predict the individual effect that these factors may have on the price or
our securities, these factors, either individually or in the aggregate, could
result in significant variations in price during any given period of time. There
can be no assurance that these factors will not have an adverse effect on the
trading prices of our common stock.

PROVISIONS OF OUR CHARTER DOCUMENTS AND DELAWARE LAW MAY HAVE ANTI-TAKEOVER
EFFECTS THAT COULD PREVENT ANY CHANGE IN CONTROL, WHICH COULD NEGATIVELY AFFECT
YOUR INVESTMENT.

       Provisions of Delaware law and of our certificate of incorporation and
bylaws could make it more difficult for a third party to acquire us, even if
doing so would be beneficial to our stockholders. These provisions permit us to:

    o issue preferred stock with rights senior to those of the common stock
      without any further vote or action by the stockholders;

    o provide for a classified board of directors;

    o eliminate the right of the stockholders to call a special meeting of
      stockholders;

    o eliminate the right of stockholders to act by written consent; and

    o impose various procedural and other requirements, which could make it
      difficult for stockholders to effect certain corporate actions.

    Any of the foregoing provisions could limit the price that certain investors
might be willing to pay in the future for shares of our common stock.


                                       31

<PAGE>

Item 3.  Quantitative and Qualitative Disclosure About Market Risk

    We are exposed to market risk related to fluctuations in interest rates and
in foreign currency exchange rates:

    Interest Rate Exposure. The primary objective of our investment activities
    ----------------------
is to preserve principal while maximizing the income we receive from our
investments without significantly increasing risk. Some of the securities that
we may invest in may be subject to market risk. To minimize this risk, we
maintain our portfolio of cash equivalents and short-term investments in a
variety of securities, including commercial paper, money market funds,
government and non-government debt securities and certificates of deposit. As of
September 30, 2001, all of our investments were in money market funds,
certificates of deposits or high quality commercial paper.

    Foreign Currency Exchange Rate Exposure. We operate in the United States,
    ---------------------------------------
manufacture in China, and substantially all sales to date have been made in U.S.
dollars. Accordingly, we currently have no material exposure to foreign currency
rate fluctuations.

    We expect our international revenues and expenses to be denominated
predominately in U.S. dollars. Certain expenses from our China operations are
incurred in the Chinese Renminbi. Our China operations will expand in the future
and account for a larger portion of our worldwide manufacturing. We anticipate
that we will experience the risks of fluctuating currencies due to this
expansion and may choose to engage in currency hedging activities to reduce
these risks.


                                       32

<PAGE>

PART II.  OTHER INFORMATION
Item 1.  Legal Proceedings

     The information required by this Item is disclosed in Note 10 of Notes to
Consolidated Financial Statements set forth in Item 1 of Part I, above. The text
of such Note is hereby incorporated herein by reference. See also "Risk Factors
- We may be involved in intellectual property disputes in the future, which will
divert management's attention and could cause us to incur significant costs and
prevent us from selling or using the challenged technology." We are the target
of a securities class action complaint and are at risk of securities class
action litigation, which could result in substantial costs and divert management
attention and resources."

Item 2. Changes in Securities and Use of Proceeds

(a)     Not applicable

(b)     Not applicable

(c)     Not applicable

(d)         On October 3, 2000, the Securities and Exchange Commission (the
            "SEC") declared effective the Company's Registration Statement on
            Form S-1 (No. 333-41506). Pursuant to this Registration Statement,
            the Company completed an initial public offering of 15,755,000
            shares of common stock, including the over-allotment shares, at an
            initial public offering price of $18.00 per share. The Company
            incurred expenses of approximately $22.6 million, of which $19.9
            million represented underwriting discounts and commissions and $2.7
            million represented other related expenses. The net offering
            proceeds to the Company after total expenses were $261.0 million.

            As of September 30, 2001, we had 239.5 million in cash, cash
            equivalents and short-term investments. All remaining proceeds are
            invested in cash, cash equivalents, or short-term investments
            consisting of highly liquid money market funds, commercial paper,
            government/federal notes and bonds and certificates of deposit.
            Consistent with the use of proceeds as discussed in our Registration
            Statement on Form S-1, the Company has approved a program to
            repurchase up to an aggregate of $21.2 million of its Common Stock.
            Such repurchases may be made from time to time on the open market at
            prevailing market prices or in negotiated transactions off the
            market. The use of these proceeds does not represent a material
            change in the use of proceeds described in the prospectus.

Item 3. Defaults Upon Senior Securities

     None

Item 4. Submission of Matters to a Vote of Security Holders

     None


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<PAGE>

Item 5. Other Information

     None

Item 6. Exhibits and Reports on Form 8-K

(a)     Exhibits

        02.1  Separation Agreement between Oplink and Daryl J. Eigen dated
        October 2, 2001.

        02.2  Amendment to Stock Option Agreements between Oplink and Daryl J.
        Eigen dated October 2, 2001.

(b)     Reports on Form 8-K

        On August 3, 2001, the Company filed a report on Form 8-K regarding its
        revision to the insider trading policy to allow directors, officers and
        other employees covered under the policy to establish, under limited
        circumstances contemplated by Rule 10b5-1 under the Exchange Act,
        written programs that permit automatic trading of the Company's stock or
        trading of the Company's stock by an independent person who is not aware
        of material nonpublic information at the time of the trade. Members of
        the Company's management team have recently adopted such programs and
        may do so in the future from time to time.


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<PAGE>
                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                          OPLINK COMMUNICATIONS, INC.
                                          (Registrant)


DATE:     November  14, 2001              By: /s/ Bruce Horn
       ------------------------               ---------------------------------
                                              Bruce Horn
                                              Chief Financial Officer
                                              (for Registrant and as Principal
                                              Financial and Accounting Officer)

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