##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended December 28, 2008
 or
 o
    
    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.
  Delaware
    
    No. 77-0411346(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 (Address of principal executive offices) (Zip Code)
  þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller Reporting Company o
 o þ




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##### 



OPLINK COMMUNICATIONS, INC.
 
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited):Condensed Consolidated Balance Sheets  December 31, 2008 and June 30, 2008
    
    
    3Condensed
Consolidated Statements of Operations  Three and six months ended
December 31, 2008 and 2007
    
    
    4Condensed Consolidated Statements of Cash Flows  Six months ended
December 31, 2008 and 2007
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    23Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    34Item 4. Controls and Procedures
    
    
    35PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    35Item 1A. Risk Factors
    
    
    37Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    50Item 3. Defaults Upon Senior Securities
    
    
    51Item 4. Submission of Matters to a Vote of Security Holders
    
    
    51Item 5. Other Information
    
    
    52Item 6. Exhibits
    
    
    52SIGNATURESEX-31.1EX-31.2EX-32.1EX-32.2
   2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1- FINANCIAL STATEMENTS
 OPLINK COMMUNICATIONS, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands, except share and per share data)
 December 31,
    
    
    June 30,2008
    
    
    2008(1)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    84,298
    
    
    $
    72,001Short-term investments
    
    
    52,537
    
    
    
    50,077Accounts receivable, net
    
    
    27,864
    
    
    
    34,200Inventories
    
    
    21,769
    
    
    
    27,950Prepaid expenses and other current assets
    
    
    6,718
    
    
    
    4,949Total current assets
    
    
    193,186
    
    
    
    189,177Long-term investments
    
    
    10,000
    
    
    
    20,003Property, plant and equipment, net
    
    
    31,709
    
    
    
    34,206Goodwill and intangible assets, net
    
    
    10,750
    
    
    
    23,487Other assets
    
    
    1,872
    
    
    
    1,867Total assets
    
    $
    247,517
    
    
    $
    268,740LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    8,753
    
    
    $
    16,014Accrued liabilities
    
    
    10,609
    
    
    
    11,756Income tax payable
    
    
    944
    
    
    
    1,000Accrued transitional costs for contract manufacturing
    
    
    160
    
    
    
    341Restructuring accrual
    
    
    
    
    
    
    370Total current liabilities
    
    
    20,466
    
    
    
    29,481Non-current liabilities
    
    
    972
    
    
    
    989Total liabilities
    
    
    21,438
    
    
    
    30,470Commitments and contingencies (Note 17)Stockholders equity:Common stock, $0.001 par value, 34,000,000 shares
authorized; 20,532,831 and 20,729,935 shares issued and outstanding
as of December 31, 2008 and June 30, 2008, respectively
    
    
    21
    
    
    
    21Additional paid-in capital
    
    
    450,980
    
    
    
    449,492Accumulated other comprehensive income
    
    
    8,535
    
    
    
    8,256Accumulated deficit
    
    
    (233,457
    )
    
    
    (219,499
    )Total stockholders equity
    
    
    226,079
    
    
    
    238,270Total liabilities and stockholders equity
    
    $
    247,517
    
    
    $
    268,740
 
 (1)
    
    The condensed consolidated balance sheet at June 30, 2008 has been derived from the audited
consolidated financial statements at that date. The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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OPLINK COMMUNICATIONS, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share data)
 (Unaudited)
 Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues
    
    $
    37,611
    
    
    $
    48,943
    
    
    $
    80,563
    
    
    $
    98,094Cost of revenues:Cost of revenues
    
    
    28,939
    
    
    
    37,841
    
    
    
    65,584
    
    
    
    75,035Stock compensation expense
    
    
    126
    
    
    
    114
    
    
    
    244
    
    
    
    243Total cost of revenues
    
    
    29,065
    
    
    
    37,955
    
    
    
    65,828
    
    
    
    75,278Gross profit
    
    
    8,546
    
    
    
    10,988
    
    
    
    14,735
    
    
    
    22,816Operating expenses:Research and development:Research and development
    
    
    2,785
    
    
    
    3,610
    
    
    
    6,067
    
    
    
    8,042Stock compensation expense
    
    
    252
    
    
    
    256
    
    
    
    475
    
    
    
    522Total research and development
    
    
    3,037
    
    
    
    3,866
    
    
    
    6,542
    
    
    
    8,564Sales and marketing:Sales and marketing
    
    
    1,945
    
    
    
    2,763
    
    
    
    4,202
    
    
    
    5,643Stock compensation expense
    
    
    267
    
    
    
    239
    
    
    
    582
    
    
    
    488Total sales and marketing
    
    
    2,212
    
    
    
    3,002
    
    
    
    4,784
    
    
    
    6,131General and administrative:General and administrative
    
    
    2,702
    
    
    
    3,614
    
    
    
    5,368
    
    
    
    8,018Stock compensation expense
    
    
    723
    
    
    
    2,919
    
    
    
    1,634
    
    
    
    4,021Total general and administrative
    
    
    3,425
    
    
    
    6,533
    
    
    
    7,002
    
    
    
    12,039Transitional costs for contract manufacturing
    
    
    
    
    
    
    532
    
    
    
    
    
    
    
    1,287Merger fees
    
    
    
    
    
    
    4,568
    
    
    
    
    
    
    
    5,989Impairment charges and other costs
    
    
    10,829
    
    
    
    626
    
    
    
    10,829
    
    
    
    626Amortization of intangible assets
    
    
    412
    
    
    
    401
    
    
    
    824
    
    
    
    667Total operating expenses
    
    
    19,915
    
    
    
    19,528
    
    
    
    29,981
    
    
    
    35,303Loss from operations
    
    
    (11,369
    )
    
    
    (8,540
    )
    
    
    (15,246
    )
    
    
    (12,487
    )Interest and other income, net
    
    
    1,257
    
    
    
    2,130
    
    
    
    2,184
    
    
    
    5,189Loss on sale of assets
    
    
    (449
    )
    
    
    (40
    )
    
    
    (455
    )
    
    
    (77
    )Loss before minority interest and income tax benefit (provision)
    
    
    (10,561
    )
    
    
    (6,450
    )
    
    
    (13,517
    )
    
    
    (7,375
    )Minority interest in loss of consolidated subsidiaries
    
    
    
    
    
    
    3,407
    
    
    
    
    
    
    
    5,891Income tax benefit (provision)
    
    
    15
    
    
    
    (309
    )
    
    
    (441
    )
    
    
    (543
    )Net loss
    
    $
    (10,546
    )
    
    $
    (3,352
    )
    
    $
    (13,958
    )
    
    $
    (2,027
    )Net loss per share:Basic
    
    $
    (0.51
    )
    
    $
    (0.16
    )
    
    $
    (0.67
    )
    
    $
    (0.09
    )Diluted
    
    $
    (0.51
    )
    
    $
    (0.16
    )
    
    $
    (0.67
    )
    
    $
    (0.09
    )Shares used in per share calculation:Basic
    
    
    20,686
    
    
    
    21,617
    
    
    
    20,721
    
    
    
    22,399Diluted
    
    
    20,686
    
    
    
    21,617
    
    
    
    20,721
    
    
    
    22,399
 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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OPLINK COMMUNICATIONS, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
 Six Months EndedDecember 31,2008
    
    
    2007Cash flows from operating activities:Net loss
    
    $
    (13,958
    )
    
    $
    (2,027
    )Adjustments to reconcile net loss to
net cash provided by operating activities:Depreciation and amortization of property and equipment
    
    
    3,817
    
    
    
    3,676Amortization of intangible and other assets
    
    
    1,908
    
    
    
    1,405Impairment charges and other costs
    
    
    10,829
    
    
    
    626Stock compensation expense
    
    
    2,935
    
    
    
    5,274Provision for excess and obsolete inventory
    
    
    4,065
    
    
    
    Amortization of discount on investments
    
    
    (229
    )
    
    
    (319
    )Loss on sale or disposal of assets
    
    
    455
    
    
    
    40Minority interest in loss of consolidated subsidiaries
    
    
    
    
    
    
    (5,891
    )Other
    
    
    (407
    )
    
    
    257Change in assets and liabilities:Accounts receivable, net
    
    
    6,363
    
    
    
    523Inventories
    
    
    2,708
    
    
    
    (1,277
    )Prepaid expenses and other current assets
    
    
    (1,715
    )
    
    
    3,502Other assets
    
    
    (7
    )
    
    
    (3
    )Accounts payable
    
    
    (7,334
    )
    
    
    1,745Accrued liabilities and other liabilities
    
    
    (1,691
    )
    
    
    2,039Net cash provided by operating activities
    
    
    7,739
    
    
    
    9,570Cash flows from investing activities:Purchases of available-for-sale investments
    
    
    (39,828
    )
    
    
    (110,435
    )Sales and maturities of available-for-sale investments
    
    
    47,602
    
    
    
    85,724Maturities of held-to-maturity investments
    
    
    
    
    
    
    86,400Proceeds from sales of property and equipment
    
    
    475
    
    
    
    16Purchases of property and equipment
    
    
    (1,834
    )
    
    
    (6,341
    )Sales of cost investments
    
    
    
    
    
    
    5,000Purchases of cost investments
    
    
    
    
    
    
    (400
    )Acquisition of businesses, net of cash acquired
    
    
    
    
    
    
    (81,280
    )Net cash provided by (used in) investing activities
    
    
    6,415
    
    
    
    (21,316
    )Cash flows from financing activities:Proceeds from issuance of common stock
    
    
    846
    
    
    
    2,311Repurchase of common stock
    
    
    (2,293
    )
    
    
    (39,577
    )Net cash used in financing activities
    
    
    (1,447
    )
    
    
    (37,266
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (410
    )
    
    
    (75
    )Net increase (decrease) in cash and cash equivalents
    
    
    12,297
    
    
    
    (49,087
    )Cash and cash equivalents, beginning of period
    
    
    72,001
    
    
    
    111,600Cash and cash equivalents, end of period
    
    $
    84,298
    
    
    $
    62,513
 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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OPLINK COMMUNICATIONS, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Description of Business.
 .
   Basis of Presentation
  6




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Risks and uncertainties.
 Net (Loss) Income Per Share
 Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Numerator:Net loss
    
    $
    (10,546
    )
    
    $
    (3,352
    )
    
    $
    (13,958
    )
    
    $
    (2,027
    )Denominator:Weighted average shares outstanding  basic
    
    
    20,686
    
    
    
    21,617
    
    
    
    20,721
    
    
    
    22,399Effect of dilutive potential common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average shares outstanding  diluted
    
    
    20,686
    
    
    
    21,617
    
    
    
    20,721
    
    
    
    22,399Net loss per share  basic
    
    $
    (0.51
    )
    
    $
    (0.16
    )
    
    $
    (0.67
    )
    
    $
    (0.09
    )Net loss per share  diluted
    
    $
    (0.51
    )
    
    $
    (0.16
    )
    
    $
    (0.67
    )
    
    $
    (0.09
    )Antidilutive stock options not included in net
loss per share calculation
    
    
    4,120
    
    
    
    2,666
    
    
    
    4,120
    
    
    
    2,666
 Comprehensive Income (Loss).
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December 31,
    
    
    June 30,2008
    
    
    2008Accumulated other comprehensive income:Cumulative translation adjustment
    
    $
    8,520
    
    
    $
    8,244Unrealized gain on investments, net
    
    
    15
    
    
    
    12$
    8,535
    
    
    $
    8,256
  Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Net loss
    
    $
    (10,546
    )
    
    $
    (3,352
    )
    
    $
    (13,958
    )
    
    $
    (2,027
    )Change in cumulative translation adjustments
    
    
    (225
    )
    
    
    1,038
    
    
    
    276
    
    
    
    1,571Change in unrealized (loss) gain on investments, net
    
    
    (12
    )
    
    
    (251
    )
    
    
    3
    
    
    
    (176
    )Total comprehensive loss
    
    $
    (10,783
    )
    
    $
    (2,565
    )
    
    $
    (13,679
    )
    
    $
    (632
    )
 Short-Term and Long-Term Investments.
  December 31, 2008Gross
    
    
    GrossCarrying
    
    
    Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedValue
    
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueShort-term investments:United States treasury
    
    $
    4,993
    
    
    $
    4,979
    
    
    $
    14
    
    
    $
    
    
    
    $
    4,993Corporate securities
    
    
    37,542
    
    
    
    37,541
    
    
    
    4
    
    
    
    (90
    )
    
    
    37,455United States government agencies
    
    
    10,002
    
    
    
    10,002
    
    
    
    
    
    
    
    (10
    )
    
    
    9,992Total short-term investments
    
    
    52,537
    
    
    
    52,522
    
    
    
    18
    
    
    
    (100
    )
    
    
    52,440Long-term investments:United States government agencies
    
    
    10,000
    
    
    
    10,000
    
    
    
    79
    
    
    
    
    
    
    
    10,079Total long-term investments
    
    
    10,000
    
    
    
    10,000
    
    
    
    79
    
    
    
    
    
    
    
    10,079Total investments
    
    $
    62,537
    
    
    $
    62,522
    
    
    $
    97
    
    
    $
    (100
    )
    
    $
    62,519
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June 30, 2008Gross
    
    
    GrossCarrying
    
    
    Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedValue
    
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueShort-term investments:Corporate securities
    
    $
    30,171
    
    
    $
    30,159
    
    
    $
    43
    
    
    $
    (18
    )
    
    $
    30,184United States government agencies
    
    
    19,906
    
    
    
    19,906
    
    
    
    2
    
    
    
    (2
    )
    
    
    19,906Total short-term investments
    
    
    50,077
    
    
    
    50,065
    
    
    
    45
    
    
    
    (20
    )
    
    
    50,090Long-term investments:United States government agencies
    
    
    20,003
    
    
    
    20,003
    
    
    
    11
    
    
    
    (64
    )
    
    
    19,950Total long-term investments
    
    
    20,003
    
    
    
    20,003
    
    
    
    11
    
    
    
    (64
    )
    
    
    19,950Total investments
    
    $
    70,080
    
    
    $
    70,068
    
    
    $
    56
    
    
    $
    (84
    )
    
    $
    70,040
  December 31, 2008Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueAvailable-for-sale investments:Corporate securities
    
    $
    29,891
    
    
    $
    1
    
    
    $
    
    
    
    $
    29,892United States treasury
    
    
    4,979
    
    
    
    14
    
    
    
    
    
    
    
    4,993Total available-for-sale investments
    
    
    34,870
    
    
    
    15
    
    
    
    
    
    
    
    34,885Held-to-maturity investments:Corporate securities
    
    
    7,650
    
    
    
    3
    
    
    
    (90
    )
    
    
    7,563United States government agencies
    
    
    20,002
    
    
    
    79
    
    
    
    (10
    )
    
    
    20,071Total held-to-maturity investments
    
    
    27,652
    
    
    
    82
    
    
    
    (100
    )
    
    
    27,634Total investments
    
    $
    62,522
    
    
    $
    97
    
    
    $
    (100
    )
    
    $
    62,519
 June 30, 2008Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueAvailable-for-sale investments:Corporate securities
    
    $
    22,493
    
    
    $
    27
    
    
    $
    (15
    )
    
    $
    22,505United States government agencies
    
    
    19,906
    
    
    
    2
    
    
    
    (2
    )
    
    
    19,906Total available-for-sale investments
    
    
    42,399
    
    
    
    29
    
    
    
    (17
    )
    
    
    42,411Held-to-maturity investments:Corporate securities
    
    
    7,666
    
    
    
    16
    
    
    
    (3
    )
    
    
    7,679United States government agencies
    
    
    20,003
    
    
    
    11
    
    
    
    (64
    )
    
    
    19,950Total held-to-maturity investments
    
    
    27,669
    
    
    
    27
    
    
    
    (67
    )
    
    
    27,629Total investments
    
    $
    70,068
    
    
    $
    56
    
    
    $
    (84
    )
    
    $
    70,040
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December 31, 2008In Loss Position
    
    
    In Loss Position< 12 months
    
    
    12 months and longer
    
    
    Total In Loss PositionGross
    
    
    
    
    
    
    Gross
    
    
    
    
    
    
    GrossFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    LossesHeld-to-maturity investments:Corporate securities
    
    
    4,527
    
    
    
    (90
    )
    
    
    
    
    
    
    
    
    
    
    4,527
    
    
    
    (90
    )United States government agencies
    
    
    4,992
    
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    4,992
    
    
    
    (10
    )Total held-to-maturity investments
    
    
    9,519
    
    
    
    (100
    )
    
    
    
    
    
    
    
    
    
    
    9,519
    
    
    
    (100
    )Total investments in loss position
    
    $
    9,519
    
    
    $
    (100
    )
    
    $
    
    
    
    $
    
    
    
    $
    9,519
    
    
    $
    (100
    )
  December 31, 2008
    
    
    June 30, 2008Amortized
    
    
    Estimated
    
    
    Amortized
    
    
    EstimatedCost
    
    
    Fair Value
    
    
    Cost
    
    
    Fair ValueAvailable-for-sale investments:Due in one year or less
    
    $
    34,870
    
    
    $
    34,885
    
    
    $
    42,399
    
    
    $
    42,411Due in one year to five years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Due in five years to ten years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Due after ten years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total available-for-sale investments
    
    
    34,870
    
    
    
    34,885
    
    
    
    42,399
    
    
    
    42,411Held-to-maturity investments:Due in one year or less
    
    
    17,652
    
    
    
    17,555
    
    
    
    7,666
    
    
    
    7,679Due in one year to five years
    
    
    10,000
    
    
    
    10,079
    
    
    
    20,003
    
    
    
    19,950Total held-to-maturity investments
    
    
    27,652
    
    
    
    27,634
    
    
    
    27,669
    
    
    
    27,629Total investments
    
    $
    62,522
    
    
    $
    62,519
    
    
    $
    70,068
    
    
    $
    70,040
 Fair Value Accounting
  10




---



##### Table of Contents



Items Measured at Fair Value on a Nonrecurring Basis
  Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalFinancial Assets:Money market funds
    
    $
    31,031
    
    
    $
    
    
    
    $
    
    
    
    $
    31,031U.S. treasury and agency securities
    
    
    
    
    
    
    39,995
    
    
    
    
    
    
    
    39,995Commercial paper
    
    
    
    
    
    
    39,881
    
    
    
    
    
    
    
    39,881Corporate securities
    
    
    
    
    
    
    11,160
    
    
    
    
    
    
    
    11,160Total financial assets
    
    $
    31,031
    
    
    $
    91,036
    
    
    $
    
    
    
    $
    122,067Financial Liabilities
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
  Items Measured at Fair Value on a Nonrecurring Basis
  11




---



##### Table of Contents



Accrued Transitional Costs for Contract Manufacturing.
 Consolidation ofWorkforce
    
    
    Excess FacilitiesReduction
    
    
    and Other Charges
    
    
    TotalBalance at June 30, 2007
    
    $
    1,234
    
    
    $
    
    
    
    $
    1,234Additional charge
    
    
    553
    
    
    
    1,732
    
    
    
    2,285Other adjustment
    
    
    (100
    )
    
    
    
    
    
    
    (100
    )Cash payments
    
    
    (1,346
    )
    
    
    (1,732
    )
    
    
    (3,078
    )Balance at June 30, 2008
    
    
    341
    
    
    
    
    
    
    
    341Cash payments
    
    
    (59
    )
    
    
    
    
    
    
    (59
    )Balance at September 30, 2008
    
    
    282
    
    
    
    
    
    
    
    282Other adjustment
    
    
    (39
    )
    
    
    
    
    
    
    (39
    )Cash payments
    
    
    (83
    )
    
    
    
    
    
    
    (83
    )Balance at December 31, 2008
    
    $
    160
    
    
    $
    
    
    
    $
    160
 Accrued Restructuring Costs.
  Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2008
    
    
    2008Accrued restructuring beginning balance
    
    $
    
    
    
    $
    370Additions
    
    
    
    
    
    
    Cash payments
    
    
    
    
    
    
    (370
    )Accrued restructuring ending balance
    
    $
    
    
    
    $
    
 Inventories
 December 31,
    
    
    June 30,2008
    
    
    2008Inventories:Raw materials
    
    $
    12,407
    
    
    $
    19,720Work-in-process
    
    
    7,716
    
    
    
    8,230Finished goods
    
    
    1,646
    
    
    
    Total
    
    $
    21,769
    
    
    $
    27,950
 12




---



##### Table of Contents



Goodwill and Intangible Assets, Net.
 EstimatedUseful Life
    
    
    Gross
    
    
    AccumulatedDecember 31, 2008
    
    (in Years)
    
    
    Amount
    
    
    Amortization
    
    
    NetTechnology
    
    
    4
    
    
    $
    8,673
    
    
    $
    2,819
    
    
    $
    5,854Trade name
    
    
    6
    
    
    
    1,595
    
    
    
    343
    
    
    
    1,252Customer relationships
    
    
    3-4
    
    
    
    5,481
    
    
    
    1,837
    
    
    
    3,644Backlog
    
    
    1
    
    
    
    97
    
    
    
    97
    
    
    
    Total
    
    
    
    
    
    $
    15,846
    
    
    $
    5,096
    
    
    $
    10,750
 EstimatedUseful Life
    
    
    Gross
    
    
    AccumulatedJune 30, 2008
    
    (in Years)
    
    
    Amount
    
    
    Amortization
    
    
    NetTechnology
    
    
    4
    
    
    $
    8,673
    
    
    $
    1,735
    
    
    $
    6,938Trade name
    
    
    6
    
    
    
    1,595
    
    
    
    209
    
    
    
    1,386Customer relationships
    
    
    3-4
    
    
    
    5,481
    
    
    
    1,147
    
    
    
    4,334Backlog
    
    
    1
    
    
    
    97
    
    
    
    97
    
    
    
    Total
    
    
    
    
    
    $
    15,846
    
    
    $
    3,188
    
    
    $
    12,658
  Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Reported as:Cost of revenues
    
    $
    542
    
    
    $
    464
    
    
    $
    1,084
    
    
    $
    738Operating expenses
    
    
    412
    
    
    
    401
    
    
    
    824
    
    
    
    667Total
    
    $
    954
    
    
    $
    865
    
    
    $
    1,908
    
    
    $
    1,405
  AmountFiscal years ending June 30,2009
    
    $
    1,9042010
    
    
    3,7822011
    
    
    3,6772012
    
    
    1,0662013
    
    
    260After 2013
    
    
    61$
    10,750
  13




---



##### Table of Contents



Accrued Liabilities.
 December 31,
    
    
    June 30,2008
    
    
    2008Accrued liabilities:Payroll and related expenses
    
    $
    2,906
    
    
    $
    3,388Accrued sales commission
    
    
    495
    
    
    
    465Accrued warranty
    
    
    346
    
    
    
    286Accrued professional fees
    
    
    1,152
    
    
    
    1,473Accrued sales return
    
    
    545
    
    
    
    594Advance deposits from customers
    
    
    96
    
    
    
    239Other
    
    
    5,069
    
    
    
    5,311$
    10,609
    
    
    $
    11,756
 Product Warranties.
  Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Balance at the beginning of the period
    
    $
    346
    
    
    $
    457
    
    
    $
    286
    
    
    $
    445Accruals for warranties issued during the period
    
    
    71
    
    
    
    38
    
    
    
    156
    
    
    
    100Accruals related to pre-existing warranties
including expirations and changes in estimates
    
    
    (4
    )
    
    
    (51
    )
    
    
    109
    
    
    
    (67
    )Cost of warranty repair
    
    
    (67
    )
    
    
    (32
    )
    
    
    (205
    )
    
    
    (66
    )Balance at the end of the period
    
    $
    346
    
    
    $
    412
    
    
    $
    346
    
    
    $
    412
 14




---



##### Table of Contents



Stock Compensation
 Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Stock-based compensation expense by type of award:Employee stock options
    
    $
    1,182
    
    
    $
    3,355
    
    
    $
    2,298
    
    
    $
    4,746Restricted stock awards
    
    
    
    
    
    
    13
    
    
    
    223
    
    
    
    266Employee stock purchase plan
    
    
    186
    
    
    
    160
    
    
    
    414
    
    
    
    262Total stock-based compensation
    
    
    1,368
    
    
    
    3,528
    
    
    
    2,935
    
    
    
    5,274Tax effect on stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net effect on net (loss) income
    
    $
    1,368
    
    
    $
    3,528
    
    
    $
    2,935
    
    
    $
    5,274Effect on net (loss) income per share:Basic
    
    $
    (0.07
    )
    
    $
    (0.16
    )
    
    $
    (0.14
    )
    
    $
    (0.24
    )Diluted
    
    $
    (0.07
    )
    
    $
    (0.16
    )
    
    $
    (0.14
    )
    
    $
    (0.24
    )
      15




---



##### Table of Contents



Valuation Assumptions
  Three
Months Ended
    
    

Six
Months EndedDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Risk-free interest rate
    
    
    2.31
    %
    
    
    3.73
    %
    
    
    2.87
    %
    
    
    4.24
    %Expected term
    
    4.6 years
    
    4.6 years
    
    4.6 years
    
    4.5 yearsExpected dividends
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Volatility
    
    
    65
    %
    
    
    46
    %
    
    
    51
    %
    
    
    43
    %
  Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Risk-free interest rate
    
    
    1.26
    %
    
    
    3.86
    %
    
    
    1.26
    %
    
    
    3.86
    %Expected term
    
    1.3 years
    
    1.1 years
    
    1.3 years
    
    1.1 yearsExpected dividends
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Volatility
    
    
    65
    %
    
    
    46
    %
    
    
    65
    %
    
    
    46
    %
   Equity Incentive Program
  16




---



##### Table of Contents



WeightedNumber of
    
    
    AverageShares Available
    
    
    Options
    
    
    Exercisefor Grant
    
    
    Outstanding
    
    
    PriceBalance, June 30, 2008
    
    
    3,561,060
    
    
    
    4,088,567
    
    
    $
    14.6000Options and awards granted (1)
    
    
    (343,040
    )
    
    
    327,040
    
    
    
    12.9205Options exercised
    
    
    
    
    
    
    (43,006
    )
    
    
    8.2492Options canceled
    
    
    252,344
    
    
    
    (252,344
    )
    
    
    21.9922Expired (2)
    
    
    (59,257
    )
    
    
    
    
    
    
    Balance, December 31, 2008
    
    
    3,411,107
    
    
    
    4,120,257
    
    
    $
    14.0803
 
 (1)
    
    The number of options and awards granted in the six months ended December 31, 2008 include
16,000 stock awards.(2)
    
    In connection with the acquisition of OCP, Oplink assumed outstanding stock options issued
pursuant to OCPs stock option plans and converted them into options to purchase shares of
Oplink common stock pursuant to conversion terms stated in the merger agreement. Stock
options that were granted and subsequently cancelled are not available for future grant.  Options Outstanding
    
    
    Options Vested and Exercisableat December 31, 2008
    
    
    at December 31, 2008Weighted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AverageRemaining
    
    
    Weighted
    
    
    Aggregate
    
    
    
    
    
    
    Remaining
    
    
    Weighted
    
    
    AggregateContractual
    
    
    Average
    
    
    Intrinsic
    
    
    
    
    
    
    Contractual
    
    
    Average
    
    
    IntrinsicRange of Exercise
    
    Number
    
    
    Life
    
    
    Exercise
    
    
    Value
    
    
    Number
    
    
    Life
    
    
    Exercise
    
    
    ValuePrice
    
    Outstanding
    
    
    (in Years)
    
    
    Price
    
    
    (in thousands)
    
    
    Outstanding
    
    
    (in Years)
    
    
    Price
    
    
    (in thousands)$0.0001 - $2.00
    
    
    7,104
    
    
    
    0.4
    
    
    $
    0.82
    
    
    $
    49
    
    
    
    7,104
    
    
    
    0.4
    
    
    $
    0.82
    
    
    $
    49$3.0001 - $5.00
    
    
    478,834
    
    
    
    3.6
    
    
    
    4.60
    
    
    
    1,473
    
    
    
    478,834
    
    
    
    3.7
    
    
    
    4.60
    
    
    
    1,473$5.0001 - $10.00
    
    
    455,343
    
    
    
    4.4
    
    
    
    6.15
    
    
    
    762
    
    
    
    406,783
    
    
    
    3.7
    
    
    
    5.98
    
    
    
    756$10.0001 - $11.00
    
    
    613,026
    
    
    
    8.7
    
    
    
    10.10
    
    
    
    
    
    
    
    110,293
    
    
    
    6.2
    
    
    
    10.14
    
    
    
    $11.0001 - $13.00
    
    
    331,720
    
    
    
    8.3
    
    
    
    12.24
    
    
    
    
    
    
    
    84,863
    
    
    
    6.0
    
    
    
    12.56
    
    
    
    $13.0001 - $15.00
    
    
    836,978
    
    
    
    8.3
    
    
    
    13.59
    
    
    
    
    
    
    
    291,336
    
    
    
    6.8
    
    
    
    13.53
    
    
    
    $15.0001 - $17.00
    
    
    87,824
    
    
    
    7.8
    
    
    
    16.94
    
    
    
    
    
    
    
    47,306
    
    
    
    7.6
    
    
    
    16.90
    
    
    
    $17.0001 - $19.00
    
    
    344,623
    
    
    
    5.6
    
    
    
    18.05
    
    
    
    
    
    
    
    244,928
    
    
    
    4.8
    
    
    
    18.07
    
    
    
    $19.0001 - $20.00
    
    
    79,111
    
    
    
    5.9
    
    
    
    19.66
    
    
    
    
    
    
    
    53,945
    
    
    
    5.0
    
    
    
    19.64
    
    
    
    $20.0001 - $21.00
    
    
    756,390
    
    
    
    7.5
    
    
    
    20.24
    
    
    
    
    
    
    
    471,039
    
    
    
    7.5
    
    
    
    20.24
    
    
    
    $21.0001 - $37.00
    
    
    76,012
    
    
    
    1.8
    
    
    
    31.07
    
    
    
    
    
    
    
    75,464
    
    
    
    1.7
    
    
    
    31.10
    
    
    
    $40.0001 - $158.00
    
    
    53,292
    
    
    
    1.8
    
    
    
    83.52
    
    
    
    
    
    
    
    53,292
    
    
    
    1.8
    
    
    
    83.52
    
    
    
    4,120,257
    
    
    
    6.7
    
    
    $
    14.08
    
    
    $
    2,284
    
    
    
    2,325,187
    
    
    
    5.1
    
    
    $
    14.36
    
    
    $
    2,278Vested and expected
to vest
    
    
    3,940,229
    
    
    
    6.3
    
    
    $
    14.13
    
    
    $
    2,284
  17




---



##### Table of Contents



Employee Stock Purchase Plan
   Repurchase of Common Stock.
   Recent Accounting Pronouncements
 18




---



##### Table of Contents



Commitments and Contingencies.
 Contractual Obligations
  Contractual Obligations Due by PeriodTotal
    
    
    Less than 1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    After 5 yearsContractual ObligationsPurchase obligations
    
    $
    13,590
    
    
    $
    13,590
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating leases
    
    
    866
    
    
    
    564
    
    
    
    302
    
    
    
    
    
    
    
    Capital expenditure
    
    
    2,143
    
    
    
    2,036
    
    
    
    86
    
    
    
    21Total
    
    $
    16,599
    
    
    $
    16,190
    
    
    $
    388
    
    
    $
    21
    
    
    $
    
 19




---



##### Table of Contents



Litigation
 IPO Securities Litigation
     20




---



##### Table of Contents



IPO 16(b) Claim
  Oplink vs. O-Net Communications, et al.
   Segment Reporting.
 21




---



##### Table of Contents



Three Months
    
    
    Six MonthsEnded December 31,
    
    
    Ended December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues:United States
    
    $
    13,674
    
    
    $
    21,652
    
    
    $
    27,921
    
    
    $
    42,891Europe
    
    
    5,705
    
    
    
    6,590
    
    
    
    12,604
    
    
    
    13,559Asia
    
    
    16,378
    
    
    
    15,783
    
    
    
    35,406
    
    
    
    32,257Canada
    
    
    1,854
    
    
    
    4,918
    
    
    
    4,632
    
    
    
    9,387Totals
    
    $
    37,611
    
    
    $
    48,943
    
    
    $
    80,563
    
    
    $
    98,094
  December 31,
    
    
    June 30,2008
    
    
    2008United States
    
    $
    8,959
    
    
    $
    10,423Asia
    
    
    22,750
    
    
    
    23,783Totals
    
    $
    31,709
    
    
    $
    34,206
  Income Taxes. Accounting for Uncertainty in
Income Taxes  an interpretation of FASB Statement No. 109 Recognition Measurement
    22




---



##### Table of Contents



Subsequent Event
  
 ITEM 2  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward-looking statements
   Overview
     23




---



##### Table of Contents



Use of Estimates and Critical Accounting Policies
   
    
    revenue recognition and product returns;
    
    depreciation and amortization;
    
    warranty obligations;
    
    allowance for doubtful accounts;
    
    excess and obsolete inventory;
    
    impairment of investments;
    
    long-lived asset valuation;
    
    business combination;
    
    income taxes;
    
    stock compensation; and
    
    loss contingencies.
   24




---



##### Table of Contents



Results of Operations
 Revenues
 Three Months Ended
    
    
    
    
    
    Percentage


    
    Six Months Ended
    
    
    
    
    
    PercentageDecember 31,
    
    Change

    
    
    Change
    
    December 31,
    
    Change

    
    
    Change2008
    
    2007
    
    
    
    
    
    2008
    
    2007(In thousands, except percentages)Revenues
    
    $
    37,611
    
    
    $
    48,943
    
    
    $
    (11,332
    )
    
    
    -23.2
    %
    
    $
    80,563
    
    
    $
    98,094
    
    
    $
    (17,531
    )
    
    
    -17.9
    %
      25




---



##### Table of Contents



Gross Profit
 Three Months Ended
    
    
    
    
    
    
    Percentage
    
    
    Six Months Ended
    
    
    
    
    
    
    PercentageDecember 31,
    
    
    Change
    
    
    Change
    
    
    December 31,
    
    
    Change
    
    
    Change2008
    
    
    2007
    
    
    
    
    
    
    
    
    
    
    2008
    
    
    2007(In thousands, except percentages)Gross profit
    
    $
    8,546
    
    
    $
    10,988
    
    
    $
    (2,442
    )
    
    
    -22.2
    %
    
    $
    14,735
    
    
    $
    22,816
    
    
    $
    (8,081
    )
    
    
    -35.4
    %Gross profit margin
    
    
    22.7
    %
    
    
    22.5
    %
    
    
    
    
    
    
    
    
    
    
    18.3
    %
    
    
    23.3
    %
      Research and Development
 Three Months Ended
    
    
    
    
    
    
    Percentage
    
    
    Six Months Ended
    
    
    
    
    
    
    PercentageDecember 31,
    
    
    Change
    
    
    Change
    
    
    December 31,
    
    
    Change
    
    
    Change2008
    
    
    2007
    
    
    
    
    
    
    
    
    
    
    2008
    
    
    2007(In thousands, except percentages)Research and
development
    
    $
    3,037
    
    
    $
    3,866
    
    
    $
    (829
    )
    
    
    -21.4
    %
    
    $
    6,542
    
    
    $
    8,564
    
    
    $
    (2,022
    )
    
    
    -23.6
    %
  26




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##### Table of Contents



Sales and Marketing
 Three Months Ended
    
    
    
    
    
    
    Percentage
    
    
    Six Months Ended
    
    
    
    
    
    
    PercentageDecember 31,
    
    
    Change
    
    
    Change
    
    
    December 31,
    
    
    Change
    
    
    Change2008
    
    
    2007
    
    
    
    
    
    
    
    
    
    
    2008
    
    
    2007(In thousands, except percentages)Sales and
marketing
    
    $
    2,212
    
    
    $
    3,002
    
    
    $
    (790
    )
    
    
    -26.3
    %
    
    $
    4,784
    
    
    $
    6,131
    
    
    $
    (1,347
    )
    
    
    -22.0
    %
  General and Administrative
 Three Months Ended
    
    
    
    
    
    
    Percentage
    
    
    Six Months Ended
    
    
    
    
    
    
    PercentageDecember 31,
    
    
    Change
    
    
    Change
    
    
    December 31,
    
    
    Change
    
    
    Change2008
    
    
    2007
    
    
    
    
    
    
    
    
    
    
    2008
    
    
    2007(In thousands, except percentages)General and
and administrative
    
    $
    3,425
    
    
    $
    6,533
    
    
    $
    (3,108
    )
    
    
    -47.6
    %
    
    $
    7,002
    
    
    $
    12,039
    
    
    $
    (5,037
    )
    
    
    -41.8
    %
  Stock Compensation Expense
 Three Months Ended
    
    
    
    
    
    
    Percentage
    
    
    Six Months Ended
    
    
    
    
    
    
    PercentageDecember 31,
    
    
    Change
    
    
    Change
    
    
    December 31,
    
    
    Change
    
    
    Change2008
    
    
    2007
    
    
    
    
    
    
    
    
    
    
    2008
    
    
    2007(In thousands, except percentages)Stock compensation
expense
    
    $
    1,368
    
    
    $
    3,528
    
    
    $
    (2,160
    )
    
    
    -61.2
    %
    
    $
    2,935
    
    
    $
    5,274
    
    
    $
    (2,339
    )
    
    
    -44.3
    %
  27




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##### Table of Contents



Transitional Costs for Contract Manufacturing
  Consolidation ofWorkforce
    
    
    Excess FacilitiesReduction
    
    
    and Other Charges
    
    
    TotalBalance at June 30, 2007
    
    $
    1,234
    
    
    $
    
    
    
    $
    1,234Additional charge
    
    
    553
    
    
    
    1,732
    
    
    
    2,285Other adjustment
    
    
    (100
    )
    
    
    
    
    
    
    (100
    )Cash payments
    
    
    (1,346
    )
    
    
    (1,732
    )
    
    
    (3,078
    )Balance at June 30, 2008
    
    
    341
    
    
    
    
    
    
    
    341Cash payments
    
    
    (59
    )
    
    
    
    
    
    
    (59
    )Balance at September 30, 2008
    
    
    282
    
    
    
    
    
    
    
    282Other adjustment
    
    
    (39
    )
    
    
    
    
    
    
    (39
    )Cash payments
    
    
    (83
    )
    
    
    
    
    
    
    (83
    )Balance at December 31, 2008
    
    $
    160
    
    
    $
    
    
    
    $
    160
  Merger Fees
  28




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##### Table of Contents



Impairment Charges and Other Costs
     Amortization of Intangible and Other Assets
  Interest and Other Income, Net
 Three Months Ended
    
    
    
    
    
    Percentage
    
    Six Months Ended
    
    
    
    
    
    PercentageDecember 31,
    
    Change
    
    Change
    
    December 31,
    
    Change
    
    Change2008
    
    2007
    
    
    
    
    
    
    
    
    
    2008
    
    2007(In thousands, except percentages)Interest and other
income, net
    
    $
    1,257
    
    
    $
    2,130
    
    
    $
    (873
    )
    
    
    -41.0
    %
    
    $
    2,184
    
    
    $
    5,189
    
    
    $
    (3,005
    )
    
    
    -57.9
    %
  29




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Loss on Sale of Assets
  Minority Interest
  Provision for Income Taxes
   Liquidity and Capital Resources
  30




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Six Months Ended December 31, 2008
           31




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Six Months Ended December 31, 2007
     .
  .
 Off-Balance Sheet Arrangements
  32




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Contractual Obligations
  Contractual Obligations Due by PeriodTotal
    
    
    Less than 1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    After 5 yearsContractual ObligationsPurchase obligations
    
    $
    13,590
    
    
    $
    13,590
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating leases
    
    
    866
    
    
    
    564
    
    
    
    302
    
    
    
    
    
    
    
    Capital expenditure
    
    
    2,143
    
    
    
    2,036
    
    
    
    86
    
    
    
    21Total
    
    $
    16,599
    
    
    $
    16,190
    
    
    $
    388
    
    
    $
    21
    
    
    $
    
 Recent Accounting Pronouncements
     33




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##### Table of Contents



ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
  Interest Rate Exposure
   Carrying
    
    
    Average Rate
    
    
    Carrying
    
    
    Average RateValue at
    
    
    of Return at
    
    
    Value at
    
    
    of Return atDecember 31,
    
    
    December 31,
    
    
    June 30,
    
    
    June 30,2008
    
    
    2008
    
    
    2008
    
    
    2008(Annualized)
    
    
    (Annualized)Investment Securities:Cash equivalents  variable rate
    
    $
    31,031
    
    
    
    1.0
    %
    
    $
    35,798
    
    
    
    1.1
    %Cash equivalents  fixed rate
    
    
    28,499
    
    
    
    0.9
    %
    
    
    19,933
    
    
    
    0.0
    %Short-term investments  variable rate
    
    
    9,619
    
    
    
    1.3
    %
    
    
    8,615
    
    
    
    2.9
    %Short-term investments  fixed rate
    
    
    42,918
    
    
    
    2.3
    %
    
    
    41,462
    
    
    
    2.0
    %Long-term investments  variable rate
    
    
    
    
    
    
    0.0
    %
    
    
    5,003
    
    
    
    2.4
    %Long-term investments  fixed rate
    
    
    10,000
    
    
    
    2.9
    %
    
    
    15,000
    
    
    
    3.0
    %Total
    
    $
    122,067
    
    
    
    
    
    
    $
    125,811
 Expected Fiscal Year Maturity Date2009
    
    2010
    
    Total
    
    Fair ValueLong-term investments  fixed rate
    
    $
    
    
    
    $
    10,000
    
    
    $
    10,000
    
    
    $
    10,079Average interest rate
    
    
    
    
    
    
    2.9
    %
    
    
    2.9
    %
 Foreign Currency Exchange Rate Exposure
  34




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##### Table of Contents



ITEM 4  CONTROLS AND PROCEDURES.
 Evaluation of Disclosure Controls and Procedures.
 Changes in Internal Control over Financial Reporting.
 
 PART II. OTHER INFORMATION
 
 ITEM 1- LEGAL PROCEEDINGS
 IPO Litigation
    35




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IPO 16(b) Claim
  Oplink vs. O-Net Communications, et al.
  36




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Item 1A Risk Factors
   We have incurred significant losses in the past, and if we are unable to continue to increase our
revenues while controlling our costs and operating expenses, we may be unable to sustain our
profitability.
   Our operating results may be further adversely affected by the downturn in the global economy and
the global telecommunications industry.
  
    
    Reduced demand for our products as a result of constraints on IT-related capital
spending, decreasing our revenue;
 
    
    Increased price competition for our products; and
 
    
    Higher overhead costs as a percentage of revenue, producing lower gross margins.
  37




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Our quarterly revenues and operating results may fluctuate significantly from quarter to quarter,
which may cause our stock price to drop.
  
    
    current uncertain macro-economic climate, including but not limit to the effects of
weakness in credit markets, could lead to reduced demand from our customers, increased price
competition for our products, and increased risk of excess and obsolete inventories;
    
    fluctuations in demand for, and sales of, our products;
    
    declines in the average selling prices of our products;
    
    fluctuations in the mix of products sold during a quarter (for example, the percentage of
total sales represented by lower margin products such as our ROADM products and line
transmission applications products);
    
    competitive factors in the fiber optic components and subsystems market, including
introductions of new products, new technologies and product enhancements by competitors,
consolidation of competitors, customers and service provider end users and pricing
pressures;
    
    the ability of our manufacturing operations in China to timely produce and deliver
products in the quantity and of the quality our customers require;
    
    our inability to cut costs quickly in the event of market or demand downturns, due to the
fact that 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;
    
    the availability of materials and components used in our products or increases in the
prices of these materials;
    
    our ability to develop, introduce, manufacture and ship new and enhanced optical
networking products in a timely manner and in production quantities without defects or other
quality issues; and
    
    costs associated with, and the outcomes of, any intellectual property or other litigation
to which we may be a party.
 Our recent acquisition of OCP may prove unfavorable to us and our stockholders, because we may not
realize expected benefits or synergies.
  38




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##### Table of Contents



We depend on the growth and success of the communications industry, which is subject to severe
fluctuations in economic activity.
    We expect volatility in our stock price, which could cause you to lose all or part of your
investment.
  
    
    quarterly variations in our operating results;
    
    changes in financial estimates by securities analysts and our failure to meet estimates;
    
    changes in market values of comparable companies;
    
    announcements by our competitors or us of new products or of significant acquisitions,
strategic partnerships or joint ventures;
    
    any loss by us of a major customer;
    
    economic fluctuations in the market for optical communications products, or in the
telecommunications industry generally;
    
    the outcome of, and costs associated with, any litigation to which we are or may become a
party;
    
    departures of key management or engineering personnel; and
    
    future sales of our common stock.
 39




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##### Table of Contents



The optical networking component industry is experiencing declining average selling prices, which
could cause our gross margins to decline and harm our operating results.
  Our ROADM Optical Switching and Routing product has accounted for a significant portion of our
revenues for recent periods. We have recently experienced declines in both unit shipments and ASPs
of our ROADM products as a result of increased competition, and we expect this trend to continue.
    If our customers do not approve our manufacturing processes and qualify our products, we will lose
significant customer sales and opportunities.
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##### Table of Contents



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.
    Our markets are highly competitive, some of our customers are also our competitors, and our other
customers may choose to purchase our competitors products rather than our products or develop
internal capabilities to produce their own fiber optic modules.
     41




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##### Table of Contents



Because we depend on third parties to supply some of our raw materials and components, we may not
be able to obtain sufficient quantities of these materials, which could limit our ability to fill
customer orders and harm our operating results.
    If we are unable develop new products and product enhancements that achieve market acceptance, our
revenues could decline, which would harm our operating results.
    42




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##### Table of Contents



If we are unable to successfully integrate acquired businesses or technologies, our operating
results may be harmed.
  
    
    additional operating expenses without additional revenues;
    
    potential dilutive issuances of equity securities;
    
    the incurrence of debt and contingent liabilities;
    
    intangible asset write-offs;
    
    research and development write-offs;
    
    other acquisition-related expenses; and
    
    cannibalization of product lines leading to revenue attrition.
  
    
    problems assimilating the purchased operations, technologies or products;
    
    unanticipated costs associated with the acquisition;
    
    diversion of managements attention from our core business;
    
    adverse effects on existing business relationships with suppliers and customers;
    
    risks associated with entering markets in which we have no or limited prior experience; and
    
    potential loss of key employees of purchased organizations.
 If we fail to effectively manage our manufacturing capability, produce products that meet our
customers quality requirements and achieve acceptable production yields in China, we may not be
able to deliver sufficient quantities of products that meet all of our customers order
requirements in a timely manner, which would harm our operating results.
  43




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
    
    our ability to procure the necessary raw materials and equipment on a timely basis;
    
    a potential lack of availability of qualified management and manufacturing personnel;
    
    our ability to maintain quality;
    
    our ability to effectively manage headcount, particularly if we undertake to expand our
manufacturing operations;
    
    vulnerability of telecommunications networks in East Asia to natural disasters, such as
the recent earthquake that damaged several undersea fiber-optic cables responsible for
Internet and telephone connections with parts of China; and
    
    our ability to quickly and efficiently implement an adequate set of financial controls to
effectively track and control inventory levels and inventory mix and to accurately predict
inventory requirements.
  If we fail to predict our manufacturing requirements accurately, we could incur additional carrying
costs and have excess and obsolete inventory or we could experience manufacturing delays, which
could cause us to lose orders or customers.
  44




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##### Table of Contents



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.
  
    
    loss of customers;
    
    loss of or delay in revenues;
    
    loss of market share;
    
    damage to our brand and reputation;
    
    inability to attract new customers or achieve market acceptance;
    
    diversion of development resources;
    
    increased service and warranty costs;
    
    legal actions by our customers; and
    
    increased insurance costs.
 Because none of our customers are obligated to purchase our products, they may cancel or defer
their purchases at any time and on short notice, which could harm our operating results.
  
    
    may stop purchasing our products or defer their purchases on short notice;
    
    are free to purchase products from our competitors;
    
    are not required to make minimum purchases; and
    
    may cancel orders that they place with us.
  45




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##### Table of Contents



We depend on key personnel to manage our business effectively in a rapidly changing market, and if
we are unable to retain our key employees and hire additional personnel, our ability to sell our
products could be harmed.
 .
  We are exposed to currency rate fluctuations and exchange controls that could adversely impact our
operating results.
   If our liability for U.S. and foreign taxes is greater than we have anticipated and reserved for,
our operating results may suffer.
  If tax benefits available to our subsidiaries located in China are reduced or repealed or our China
subsidiaries fail to meet the requirements for utilizing such tax benefits, our financial condition
and operating results could suffer.
  46




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##### Table of Contents



If we are unable to protect our proprietary technology, our ability to succeed will be harmed.
  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.
   
    
    obtain from the owner of the infringed intellectual property right a license to sell or
use the relevant technology, which license may not be available on reasonable terms, or at
all;
    
    stop selling, incorporating or using our products that use the challenged intellectual
property;
    
    pay substantial monetary damages; or
    
    redesign the products that use the technology.
  Our failure to comply with governmental regulations could subject us to liability. New laws could
be enacted that increase the risks and costs to Oplink. A new labor contract law has been enacted
in China.
  47




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##### Table of Contents



Failure to maintain effective internal controls in accordance with Section 404 of the
Sarbanes-Oxley Act of 2002 could impair the reliability of our financial statements, cause us to
delay filing our periodic reports with the SEC, harm our reputation and adversely affect our stock
price.
  48




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Changes in existing financial accounting standards or practices may adversely affect our results of
operations.
  Disruption to commercial activities in the United States or in other countries, particularly in
China and Taiwan, may adversely impact our results of operations, our ability to raise capital or
our future growth.
  
    
    disruptions to commercial activities or damage to our facilities as a result of natural
disasters, political unrest, war, terrorism, labor strikes, and work stoppages;
    
    disruptions of telecommunications networks due to natural disasters;
    
    difficulties and costs of staffing and managing foreign operations with personnel who
have expertise in optical network technology;
    
    unexpected changes in regulatory or certification requirements for optical systems or
networks;
    
    disruptions in the transportation of our products and other risks related to the
infrastructure of foreign countries;
    
    economic instability;
    
    any future outbreak of severe acute respiratory syndrome, avian influenza and other
epidemics or illnesses; and
    
    power shortages at our manufacturing facilities in China, which may lead to production
delays.
 49




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##### Table of Contents



Provisions of our charter documents and Delaware law and other arrangements may have anti-takeover
effects that could prevent any change in control, which could negatively affect your investment.
  
    
    issue preferred stock with rights senior to those of the common stock without any further
vote or action by the stockholders;
    
    provide for a classified board of directors;
    
    eliminate the right of the stockholders to call a special meeting of stockholders;
    
    eliminate the right of stockholders to act by written consent; and
    
    impose various procedural and other requirements, which could make it difficult for
stockholders to effect certain corporate actions.
  
 ITEM 2  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Repurchases of Equity Securities
  50




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##### Table of Contents



Maximum number (orTotal number of
    
    approximate dollarshares (or units)
    
    value) of shares (orTotal number of
    
    Average price
    
    purchased as part of
    
    units) that may yet beshares (or units)
    
    paid per share
    
    publicly announced
    
    purchased under theMonth
    
    purchased
    
    (or unit)
    
    plans or programs
    
    plans or programsMonth 1
(October 29 
November 2, 2008)
    
    
    0
    
    
    
    
    
    
    
    0
    
    
    $
    20,000,000Month 2
(November 3 
November 30, 2008)
    
    
    257,210
    
    
    $
    6.87
    
    
    
    257,210
    
    
    $
    18,228,616Month 3
(December 1 
December 28, 2008)
    
    
    69,940
    
    
    $
    7.44
    
    
    
    69,940
    
    
    $
    17,707,122Total
    
    
    327,150
    
    
    $
    7.00
    
    
    
    327,150
    
    
    $
    17,707,122
 
 ITEM 3  DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  AuthorityFor
    
    Withheld1. Election to the Board
of Directors of two
Class II Directors:Chieh Chang
    
    
    16,157,078
    
    
    
    708,487Hua Lee
    
    
    16,278,098
    
    
    
    587,467
  For
    
    Against
    
    Abstain2. Ratification of the
appointment of
Burr, Pilger &
Mayer LLP as
Oplinks
independent
registered public
accounting firm for
the fiscal year
ending June 30,
2009
    
    
    16,754,825
    
    
    
    98,002
    
    
    
    12,738
 51




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##### Table of Contents



ITEM 5  OTHER INFORMATION
  
 ITEM 6   EXHIBITS
 
 Exhibit Index
 Exhibit No.

    
    Description3.1
    (1)
    
    Amended and Restated Certificate of Incorporation of the Registrant.3.2
    (1)
    
    Bylaws of the Registrant.3.3
    (2)
    
    Certificate of Designation of Series A Junior Participating Preferred Stock.3.4
    (3)
    
    Certificate of Amendment to Amended and Restated Certificate of
Incorporation of the Registrant.10.1
    (4)
    
    Separation Agreement and Release dated November 21, 2008 between the
Registrant and Thomas P. Keegan.31.1
    
    
    Certification of Chief Executive Officer Required under Rule 13a-14(a) of
the Securities Exchange Act of 1934, as amended.31.2
    
    
    Certification of Chief Financial Officer Required under Rule 13a-14(a) of
the Securities Exchange Act of 1934, as amended.32.1
    *
    
    Certification of Chief Executive Officer Required under Rule 13a-14(b) or
Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended, and
Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C.
Section 1350).32.2
    *
    
    Certification of Chief Financial Officer Required under Rule 13a-14(b) or
Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended, and 18
U.S.C. Section 1350.
 
 (1)
    
    Incorporated by reference to the Registrants Registration Statement
on Form S-1/A, No. 333-41506, as filed on October 3, 2000.(2)
    
    Previously filed as an Exhibit to the Registrants Report on Form 8-K
filed on March 22, 2002 and incorporated herein by reference.(3)
    
    Previously filed as an Exhibit to the Registrants Quarterly Report on
Form 10-Q filed on November 14, 2006 and
incorporated herein by reference.(4)
    
    Previously filed as an Exhibit to the Registrants Report on Form 8-K
filed on November 24, 2008 and incorporated herein by reference.*
    
    The certifications attached as Exhibits 32.1 and 32.2 accompanies this Quarterly Report on Form
10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by
the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. 52




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##### Table of Contents



SIGNATURES
  OPLINK COMMUNICATIONS, INC.
(Registrant)DATE: February 6, 2009
    By:
    /s/ Shirley YinShirley YinChief Financial Officer
(Principal Financial and Accounting Officer) 53