##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934.For the fiscal year ended
    March 31, 2006oro

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 0-15895
  STRATEX NETWORKS,
    INC.
 (Exact Name of Registrant as
    Specified in Its Charter)
  Delaware(State of
    Incorporation)

77-0016028(I.R.S. Employer
    Identification No.)120 Rose Orchard Way
    San Jose, California(Address of Principal
    Executive Offices)

95134(Zip
    Code)   (Registrants Telephone Number, Including Area Code):
 408-943-0777
  Securities registered pursuant to Section 12(b) of the
    Act:
 None
 Securities registered pursuant to Section 12(g) of the
    Act:
  Common Stock, Par Value $0.01 Per Share
 (Title of Class)
  o þ
  o þ
  þ o
  Regulation S-K 10-K Form 10-K. þ
  Rule 12b-2
 o þ o
  Rule 12b-2 o þ
      DOCUMENTS INCORPORATED BY REFERENCE
  Form 10-K. Form 10-K.
  Form 10-K.




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##### 



TABLE OF
    CONTENTS
  STRATEX
    NETWORKS, INC.
    2006
    FORM 10-K
    ANNUAL REPORT
  
  PART IItem 1


Business


1Item 1A


Risk
    Factors


11Item 1B


Unresolved Staff
    Comments


20Item 2


Properties


20Item 3


Legal
    Proceedings


20Item 4


Submission of
    Matters to a Vote of Security Holders


20PART IIItem 5


Market for the
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


20Item 6


Selected Financial
    Data


20Item 7


Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


21Item 7A


Quantitative and
    Qualitative Disclosures About Market Risk


21Item 8


Financial
    Statements and Supplementary Data


21Item 9


Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


21Item 9A


Controls and
    Procedures


21Item 9B


Other
    Information


24PART IIIItem 10


Directors and
    Executive Officers of the Registrant


24Item 11


Executive
    Compensation


24Item 12


Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


24Item 13


Certain
    Relationships and Related Transactions


25Item 14


Principal
    Accountant Fees and Services


25PART IVItem 15


Exhibits and
    Financial Statement Schedule


25Signatures


27EXHIBIT 4.10EXHIBIT 10.18EXHIBIT 10.19EXHIBIT 10.20EXHIBIT 13.1EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2




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Item 1.
    Business  Form 10-K.
    www.stratexnet.com. Form 10-K, Form 10-Q, Form 8-K, www.sec.gov 1-800-SEC-0330.
  Introduction
    Eclipse Eclipse
      Industry
    Background
   1




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
    Increase in Global Wireless Subscribers and Minutes of
    Use.  The number of global wireless subscribers
    and minutes of use per subscriber are expected to continue to
    increase. The primary drivers include increased subscription,
    increased voice minutes of use per subscriber and the growing
    use by subscribers of data applications. Third generation data
    applications have been introduced in the developed countries and
    this has fueled an increase in minutes of data use. We believe
    that this growth, due to new data services, will continue for
    the next two to three years.
    Increased establishment of mobile and fixed wireless
    telecommunications infrastructures in developing
    countries.  In parts of the world,
    telecommunications services are inadequate or unreliable because
    of the lack of existing infrastructures. To service providers in
    developing countries seeking to increase the availability and
    quality of telecommunications and internet access services,
    wireless solutions are an attractive alternative to the
    construction or leasing of wireline networks, given their
    relatively low cost and ease of deployment. As a result, there
    has been an increased establishment of mobile and fixed wireless
    telecommunications infrastructures in developing countries.
    Emerging telecommunications markets in Africa, Asia, the Middle
    East, Latin America and Eastern Europe are characterized by a
    need to build out basic telecommunications systems.
    Technological advances, particularly in the wireless
    telecommunications market.  The demand for
    cellular telephone and other wireless services and devices
    continues to increase due to technological advances and
    increasing consumer demand for connectivity to data and voice
    services. New mobile-based services based upon what is commonly
    referred to as third-generation technology is also
    creating additional demand and growth in mobile networks and
    their associated infrastructure. The demand for fixed broadband
    access networks has also increased due to data transmission
    requirements resulting from Internet access demand. Similar to
    cellular telephone networks, wireless broadband access is
    typically less expensive to install and can be installed more
    rapidly than a wireline or fiber alternative. New and emerging
    services such as WiMAX are expected to expand over the next
    several years. Both WiMAX and new high-speed mobile-based
    technology can be used for a number of applications, including
    last mile broadband connections, hotspots and
    cellular backhaul, and high-speed enterprise connectivity for
    business.
    Global deregulation of telecommunications market and
    allocation of radio frequencies for broadband wireless
    access.  Regulatory authorities in different
    jurisdictions allocate different portions of the radio frequency
    spectrum for various telecommunications services. Many countries
    have privatized the state-owned telecommunications monopoly and
    opened their markets to competitive network service providers.
    Often these providers choose a wireless transmission service,
    which causes an increase in the demand for transmission
    solutions. Such global deregulation of the telecommunications
    market and the related allocation of radio frequencies for
    broadband wireless access transmission have led to increased
    competition to supply wireless-based transmission systems.   2




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Our
    Solution
    
    Comprehensive product line.  We offer a
    comprehensive product line of transmission solutions, network
    monitoring systems and control systems that address a wide range
    of transmission frequencies, ranging from 0.3 GHz to
    38 GHz, and a wide range of transmission capacities,
    typically ranging from 64 Kilobits to 2OC-3 or 311 Mbps.
    Our newest product platform, Eclipse, which began
    shipping in January 2004, is one of the first transmission
    platforms that combines a broad range of wireless transmission
    functions with a network processing node, containing many
    functions that previously had to be separately purchased from
    one or more equipment suppliers. Eclipseincludes node
    management, multiplexing, routing and cross-connect functions,
    as well as the flexibility to increase transmission speeds and
    adjust capacity through software upgrades. Eclipseis
    designed to simplify complex networks and lower the total cost
    of ownership over the product life.
    Flexible, easily configurable products.  Our
    use of standard design platforms, flexible architectures and
    chip designs and software configurable features allows us to
    offer our customers high-performance products with a high degree
    of flexibility and functionality, while shortening the time
    required for us to develop new configurations and capabilities.
    The software features of our products provide our customers with
    a greater degree of flexibility in installing, operating and
    maintaining their networks. Eclipse, our newest product,
    is a highly scalable and configurable, single platform product.
    The Eclipseplatform utilizes a highly software
    configurable architecture design, which enables capacity
    upgrades and provides users with the ability to adapt to
    changing conditions with minimal cost and disruption. We believe
    that Eclipse makes it easier for users to plan and deploy
    their networks.
    Low total cost of ownership of
    Eclipse.  Compared to our prior generation
    products, our Eclipsesolution has a relatively low total
    cost of ownership, based on overall initial acquisition,
    installation and ongoing operation and maintenance costs. This
    is due to the following factors: with a single platform, the
    number of parts is reduced, less rack space is required and
    fewer spare parts are needed; installation costs are lower
    because of a simpler installation process due to built-in
    capability, resulting in less ancillary equipment; and
    maintenance and operation costs are lower because of the fewer
    number of parts required to obtain the same functionality; and a
    longer product life. The highly configurable Eclipseplatform also results in a lower total cost of ownership by
    providing users with the ability to adapt to changing conditions
    or increase network capacity with lower cost and less disruption
    to the existing connection.
    Consulting and support.  In addition to our
    product offerings, we provide network planning, design and
    installation services and work closely with our customers to
    optimize transmission networks. Our sales personnel are highly
    trained to assist customers with selecting and configuring
    wireless systems suitable for the customers particular
    needs.  Our
    Strategy
    
    Continue to serve our existing customer base and leverage our
    global presence and distribution channels.  Since
    1985, we have sold over 300,000 microwave radios, which have
    been installed in over 150 countries. Over 95% of our net sales
    in fiscal 2006 and 94% of our net sales in fiscal 2005 were
    derived outside the United States. We intend to leverage our
    customer base, longstanding presence in many countries and our
    distribution channels to continue to sell existing and new
    products. We believe we are well positioned to continue to
    address worldwide market opportunities for wireless
    infrastructure.
    Continue to introduce innovative solutions to meet the needs
    of our customers.  We have a long history of
    introducing innovative products into the telecommunications
    industry. For example, in 2002, we introduced the Altium MXplatform, providing a high capacity wireless solution,
    allowing the deployment of voice and 3




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advanced data services for mobile backhaul, fixed wireless
    access and private network applications. In January 2004, we
    began shipment of our new product Eclipse, one of the
    first transmission platforms that combines a broad range of
    wireless transmission functions with a network processing node,
    containing many functions that previously had to be separately
    purchased from one or more equipment suppliers. As a result, we
    believe that Eclipseis a significant innovation that
    addresses customer needs. We also intend to continue our history
    of developing and introducing innovative products, enhancing our
    products, maintaining technological competitiveness and meeting
    customer requirements through internal development and
    acquisition.  
    Expand existing markets and explore new market
    opportunities.  We intend to expand our presence
    in the mobile wireless market by exploiting market opportunities
    created by the growing number of global wireless subscribers,
    increasing global minutes of use and increasing data
    transmission. We also intend to expand share in the emerging
    data business. In particular, carrier-grade Ethernet market
    opportunities are starting to emerge and Eclipse is ideally
    suited to meet those needs.  Financial
    information by operating segment and geographic area
    Product
    Portfolio
  tm tm tm tm ® ® ®
  Eclipse
  Eclipse Altium, XP4 Plus DXR 700 Eclipse
  
    Simplifies complex networks.  Each EclipseIntelligent Node Unit, or INU, is a complete network node,
    able to support multiple radio paths. Eclipseallows
    operators to replace multiple products in their network with a
    single INU;
    Single, common product platform with a low total cost of
    ownership.  Eclipseis a wireless platform
    that combines low and high capacity, as well as high power
    capability, into a single, common product platform designed to
    significantly lower the total cost of ownership of wireless
    networks over the product life. With a single platform,
    Eclipserequires fewer parts, less rack space and fewer
    spare parts than the combination of our current radio products
    and the non-radio components supplied by other equipment
    suppliers, which are required for a complete installation. The
    integration of multiple features in the INU simplifies the
    installation process and requires less cabling, thereby reducing
    total installation costs. Over the product life, maintenance and
    operating costs are anticipated to be significantly lower due to
    the fewer parts and spares. In addition the customer can
    increase the capacity of the system by purchasing software
    upgrades without replacing existing hardware.;
    Comprehensive capability.  Eclipseis
    designed to cover low to high capacities, long and short haul
    applications, wide frequency coverage (5 to 38 GHz) and
    with traditional TDM and Ethernet transmission capabilities. It
    also includes a built-in add-drop multiplexer and integrated
    cross-connect capability;
    Easily configurable.  Eclipseis
    configurable with software, allows easy capacity upgrades, and
    provides users with the ability to adapt to changing conditions
    with a minimum of cost and disruption. Eclipseis
    designed to make it easier for users to plan and deploy their
    networks and requires less training of installation personnel; 4




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
    New software-based management solutions enable greater
    control over the network. New software-based management
    solutions, including the Eclipse Portalcraft tool and
    the latest release of ProVision,are designed to enable
    greater control over a network by providing simple,
    user-focused, local or remote configuration control and status
    monitoring; and
    Increased network reliability.  Eclipsehas been designed to provide increased network reliability
    to our carrier customers. We have closely monitored the
    predicted mean time between failures throughout the development
    process for Eclipse. In addition, with less cabling, less
    rack space, and fewer spare parts, Eclipseis designed to
    have a significantly lower failure rate than current products.
    Capability to easily add new features and
    products.  Additions to the Eclipse platform in
    fiscal 2006 include carrier-grade Ethernet products. These have
    been provided in the form of an Ethernet plug-in for the INU,
    the DAC ES as well as a Gigabit Ethernet for the INU, the DAC
    GE. In addition, an Ethernet based, stand-alone IDU, the Connect
    ES, is capable of providing 50, 100, 150 and 200 mbps capability
    under software control.  License
    Exempt Radio Product
  
    VeloxLE.  VeloxLE is a license-exempt radio
    platform. It is available in 2.4 and 5.8 GHz, and 1,
    2, 4 or
    8 T1/E1
    configurations. All options of this product are available for up
    to 50 Mbps with a mix of E1/T1 or Ethernet interfaces.  Network
    Monitoring and Control System
  ProVision. ProVision ProVision ProVision ProVision
  Legacy
    Products
  High
    Capacity Radio
  AltiumMX. AltiumMX AltiumMX AltiumMX AltiumMX
  Medium-to-Low
    Capacity Radios
  XP4 Plus. XP4 Plus low-to-medium XP4 Plus XP4 Plus XP4 Plus 4/8xDS-1 1xDS-3.
 5




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DXR 700.
  Customers
      Sales,
    Marketing and Service
       6




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Research
    and Development
  Eclipse
    Manufacturing
      Backlog
    Competition
    Government
    Regulation
   7




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Intellectual
    Property
      Raw
    Materials and Supplies
    Employees
   8




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Forward
    Looking Statements
  Form 10-K
  
    Our belief that the trend of increased spending in the wireless
    telecommunications industry will continue over the next two
    years;
    Our expectation that the number of global wireless subscribers
    and minutes of use per subscriber will continue to increase
    significantly;
    Our expectation that services such as third generation mobile
    and WiMax will continue to grow;
    Our belief that as broadband access and telecommunications
    requirements grow, wireless systems will continue to be used as
    transmission systems to support a variety of existing and
    expanding communications networks and applications;
    Our belief that Eclipsewill make it easier for users to
    plan and deploy their networks;
    Our belief that wireless systems will be used to address the
    connection requirements of several markets and applications,
    including the broadband access market, cellular applications,
    and private networks;
    Our intention to leverage our customer base, longstanding
    presence in many countries and distribution channels to continue
    to sell existing and new products;
    Our belief that we are well positioned to continue to address
    worldwide market opportunities for wireless infrastructure
    suppliers;
    Our belief that Eclipseis a significant innovation that
    addresses customer needs;
    Our belief that the highly configurable Eclipseplatform
    will result in a lower total cost of ownership by providing
    users with the ability to adapt to changing conditions or
    increase network capacity with minimal cost and disruption;
    Our belief that our sales personnel are highly trained to assist
    customers with selecting and configuring wireless systems
    suitable for the customers particular needs;
    Our intention to continue our history of developing and
    introducing innovative products, enhancing our products,
    maintaining technological competitiveness and meeting customer
    requirements through internal development and acquisition;
    Our intention to expand our presence in the mobile wireless
    market by exploiting market opportunities created by the growing
    number of global wireless subscribers, increasing global minutes
    of use and increasing data transmission;
    Our intention to expand our fixed wireless and enterprise
    businesses through marketing and sales of our products
    Eclipse and Velox;
    Our belief that a direct and continuing relationship with
    service providers is a competitive advantage in attracting new
    customers and satisfying existing ones;
    Our intention to continue to focus significant resources on
    product development to maintain our competitiveness and to
    support our entry into new markets; 9




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
    Our belief that our ability to compete successfully will depend
    on a number of factors both within and outside our control,
    including price, quality, availability, customer service and
    support, breadth of product line, product performance and
    features, rapid
    time-to-market
    delivery capabilities, reliability, timing of new product
    introductions by us, our customers and our competitors, the
    ability of our customers to obtain financing and the uncertainty
    of regional socio- and geopolitical factors;
    Our expectation to continue to experience declining average
    sales prices for our products;
    Our expectation that international sales will continue to
    account for the majority of our net product sales for the
    foreseeable future;
    Our belief that our ability to enhance our current products,
    develop and introduce new products on a timely basis, maintain
    technological competitiveness and meet customer requirements is
    essential to our success;
    Our belief that the new product development programs could
    result in new products and expansion of the Eclipseproduct line;
    Our expectation that our research and development spending will
    be slightly higher in fiscal 2007 due to increases in salaries
    and related personnel expenses as well as modest increases in
    personnel employed in this area.;
    Our belief that our subcontractors, as part of our outsourced
    manufacturing strategy, will continue to perform and deliver our
    products in a timely and satisfactory manner;
    Our expectation that competition will increase;
    Our belief that we have complied by governmental laws
    established to avoid interference among users of microwave
    frequencies and to permit interconnection of telecommunications
    equipment;
    Our belief that we have complied with the export/import license
    requirements;
    Our belief that we have complied with numerous laws and
    regulations designed to protect the environment and such
    compliance has not had a material adverse effect on our business
    or financial condition;
    Our belief that while our ability to compete may be affected by
    our ability to protect our intellectual property, because of the
    rapid pace of technological change in the wireless
    telecommunications industry, our innovative skills, technical
    expertise and ability to introduce new products on a timely
    basis will be more important in maintaining our competitive
    position than protection of our intellectual property;
    Our belief that our relationship with our employees is good;
    Our belief that any regulatory changes, which are affected by
    political, environmental, economic and technical factors, will
    not significantly impact our operations;
    Our belief that the redevelopment of the Middle East region as a
    result of the war in Iraq has and may continue to provide sales
    opportunities;
    Our belief that successful new product introductions provide a
    significant competitive advantage because customers make an
    investment of time in selecting and learning to use a new
    product, and are reluctant to switch thereafter;
    Our anticipation that our available cash and cash equivalents at
    March 31, 2006, combined with anticipated receipts of
    outstanding accounts receivable and the available credit of
    $10.6 million under our $50 million credit facility,
    should be sufficient to meet our anticipated needs for working
    capital and capital expenditures through March 31, 2007;
    Our expectation that the telecommunications industry will
    continue to experience consolidation among its participants;
    Our intent to consider opportunities to raise additional capital
    through a public or private equity offering and debt financing; 10




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
    Our belief that our facilities are adequate to meet our
    anticipated needs for the foreseeable future; and
    Our belief that we will achieve cost reductions and distribution
    efficiencies through an indirect sales model in Latin and South
    America.    Item 1A.
    Risk
    Factors        We
    have had a history of losses, and we may not sustain
    profitability on a quarterly or annual basis.
    Competition
    could harm our ability to maintain or improve our position in
    the market and could decrease our revenues.
      time-to-market
 11




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Our
    average sales prices are declining.
    If we
    do not successfully market our newest product, Eclipse, our
    business would be harmed.
    Because
    a significant amount of our revenues comes from a few customers,
    the termination of any of these customer relationships may harm
    our business.
    Years Ended
    March 31,2006


2005Number of significant customers


1



1Percentage of net sales


10
%


21
%    12




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We may
    be subject to litigation regarding intellectual property
    associated with our wireless business and this could be costly
    to defend and resolve, and could prevent us from using or
    selling the challenged technology.
    Due to
    the significant volume of our international sales, we are
    susceptible to a number of political, economic and geographic
    risks that could harm our business.
    
    unexpected changes in regulatory requirements;
    fluctuations in foreign currency exchange rates;
    imposition of tariffs and other barriers and restrictions;
    management and operation of an enterprise spread over various
    countries;
    burden of complying with a variety of foreign laws and
    regulations;
    general economic and geopolitical conditions, including
    inflation and trade relationships;
    war and acts of terrorism;
    natural disasters;
    currency exchange controls; and
    changes in export regulations.  If we
    fail to develop and maintain distribution and licensing
    relationships, our revenues may decrease.
   13




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Our
    industry is volatile and subject to frequent changes, and we may
    not be able to respond effectively or in a timely manner to
    these changes.
  start-up
  The
    inability of our subcontractors to perform, or our key suppliers
    to manufacture and deliver materials, could cause our products
    to be produced in an untimely or unsatisfactory manner, or not
    at all.
      Consolidation
    within the telecommunications industry and among suppliers could
    decrease our revenues.
   14




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Our
    success depends on new product introductions and
    acceptance.
      Our
    customers may not pay us in a timely manner, or at all, which
    would decrease our income and utilize our working
    capital.
    March 31,

March 31,2006

2005Number of significant customers

2


Percentage of accounts receivable
    balance

12%, 10%


     We
    will need additional capital in the future. If additional
    capital is not available, we may not be able to continue to
    operate our business pursuant to our business plan or we may
    have to discontinue our operations.
   15




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We may
    breach our covenants relating to our outstanding debt against
    our $50 million revolving credit facility with a commercial
    bank resulting in a secured creditor claim action against us by
    the bank and the inability to obtain future
    borrowings.
    Negative
    changes in the capital markets available for telecommunications
    and mobile cellular projects may result in reduced revenues and
    excess inventory, that we cannot sell or may be required to sell
    at distressed prices, and may result in longer credit terms to
    our customers.
   16




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If we
    fail to manage our internal development or successfully
    integrate acquired businesses, we may not effectively manage our
    growth and our business may be harmed.
    The
    unpredictability of our
    quarter-to-quarter
    results may harm the trading price of our common
    stock.
    
    volume and timing of product orders received and delivered
    during the quarter;
    our ability and the ability of our key suppliers to respond to
    changes on demand as needed;
    suppliers inability to perform and timely deliver as a result of
    their financial condition, component shortages or other supply
    chain constraints;
    continued market expansion through strategic alliances;
    continued timely rollout of Eclipse functionality and features;
    increased competition resulting in downward pressures on the
    price of the Companys products and services;
    unexpected delays in the schedule for shipments of Eclipse and
    new generations of the Eclipse platform;
    failure to realize expected cost improvement throughout the
    Companys supply chain;
    order cancellations or postponements in product deliveries
    resulting in delayed revenue recognition.
    war and acts of terrorism;
    natural disasters;
    ability of our customers to obtain financing to enable their
    purchase of our products;
    fluctuations in foreign currency exchange rates;
    regulatory developments including denial of export and import
    licenses; and
    general economic conditions worldwide.  quarter-to-quarter
 17




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Acts
    of terrorism can negatively impact revenues.
    Because
    of intense competition for highly skilled candidates, we may not
    be able to recruit and retain qualified personnel.
    If we
    are unable to protect our intellectual property rights
    adequately, we may be deprived of legal recourse against those
    who misappropriate our intellectual property.
    If
    sufficient radio frequency spectrum is not allocated for use by
    our products, and we fail to obtain regulatory approval for our
    products, our ability to market our products may be
    restricted.
     18




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We may
    not successfully adapt to regulatory changes in our industry,
    which could significantly impact the operation of our
    business.
    Our
    stock price may be volatile, which may lead to losses by
    investors.
    Changes
    in Accounting Standards for Share-Based Payments will reduce our
    future profitability.
    If we
    fail to maintain an effective system of internal controls, we
    may not be able to accurately report our financial results. As a
    result, current and potential stockholders could lose confidence
    in our financial reporting, which would harm our
    business.
   19




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Item 1B.
    Unresolved
    Staff Comments.    Item 2.
    Properties      Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   PART II  Item 5.
    Market
    for the Registrants Common Equity, Related Stockholder
    Matters and Issuer Purchases of Equity Securities.    Item 6.
    Selected
    Financial Data   20




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Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations    Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk.    Item 8.
    Financial
    Statements and Supplementary Data    Item 9.
    Changes
    in and Disagreements with Independent Auditor on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e) Form 10-K.
  Form 10-K,
  Managements
    Report on Internal Control over Financial Reporting
  Rule 13a-15(f)
   21




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Changes
    in Internal Control over Financial Reporting
    Inherent
    Limitation on the Effectiveness of Internal Controls
    Report of
    Independent Registered Public Accounting Firm
    Internal
    Control  Integrated Framework
 22




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Internal Control  Integrated Framework
 23




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Internal Control  Integrated Framework
    
     Item 9B.
    Other
    Information    PART III  Item 10.
    Directors
    and Executive Officers of the Registrant    Form 10-K www.stratexnet.com.
   Item 11.
    Executive
    Compensation     Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    No. 33-8048,
    24




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(a)


(b)


(c)Number ofNumber of





SecuritiesSecurities to be





Remaining AvailableIssued Upon


Weighted-Average


for Future IssuanceExercise of


Exercise Price of


Under PlansOutstanding


Outstanding


(ExcludingOptions, Warrants


Options, Warrants


Securities ListedPlan Category

and Rights


and Rights


in Column (a))Equity compensation plans approved
    by security holders


11,022,447


$
5.75



5,385,085Equity compensation plans not
    approved by security holders


336,359


$
5.46



377,493Total


11,358,806


$
5.74



5,762,578      Item 13.
    Certain
    Relationships and Related Transactions     Item 14.
    Principal
    Accounting Fees and Services  Form 10-K.
  PART IV  Item 15.
    Exhibits,
    Financial Statement Schedule.  Form 10-K.
  1.
    Index to
    Financial Statements               25




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##### Table of Contents



2.
    Financial
    Statement Schedule          3.
    Exhibits       26




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##### Table of Contents



SIGNATURES  Form 10-K
    STRATEX NETWORKS, INC.
  By:
    /s/  Thomas
    H. Waechter    President and Chief Executive Officer
   POWER OF
    ATTORNEY
    Form 10-K. Form 10-K
    Form 10-K
  Signatures

Signing Capacity

Date/s/  Thomas.
    H. WaechterThomas.
    H. Waechter

President and Chief Executive
    Officer (Principal Executive Officer)

June 14, 2006/s/  Carl
    A. ThomsenCarl
    A. Thomsen

Senior Vice President, Chief
    Financial Officer & Secretary (Principal Financial and
    Accounting Officer)

June 14, 2006/s/  Charles
    D. KissnerCharles
    D. Kissner

Chairman of the Board of Directors

June 14, 2006 27




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##### Table of Contents



Signatures

Signing Capacity

Date/s/  Richard
    C. AlberdingRichard
    C. Alberding

Director

June 14, 2006/s/  Edward
    F. ThompsonEdward
    F. Thompson

Director

June 14, 2006/s/  James
    D. MeindlJames
    D. Meindl

Director

June 14, 2006/s/  V.
    Frank MendicinoV.
    Frank Mendicino

Director

June 14, 2006/s/  William
    A. HaslerWilliam
    A. Hasler

Director

June 14, 2006/s/  Clifford
    H. HiggersonClifford
    H. Higgerson

Director

June 14, 2006  28




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
         
    29




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##### Table of Contents



Schedule II
  Stratex
    Networks, Inc.
  Valuation
    and Qualifying Accounts and Reserves
  Allowance
    for Doubtful Accounts
  Balance at


Charged to Costs


Deductions/


Balance atDescription of Year

Beginning of Year


and Expenses


Write-off


End of Year(In thousands)Year Ended March 31, 2006

$
2,769


$
548


$
(1,177
)

$
2,140Year Ended March 31, 2005

$
2,373


$
1,067


$
(671
)

$
2,769Year Ended March 31, 2004

$
6,395


$
33


$
(4,055
)

$
2,373  30




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber

Description2
.1

Certificate of Ownership and
    Merger merging DMC Stratex Networks, Inc. into Digital Microwave
    Corporation (incorporated by reference to Exhibit 2.1 to
    the Companys Quarterly Report on
    Form 10-Q
    filed on August 11, 2000).3
.1

Second Restated Certificate of
    Incorporation, filed with the Secretary of State of Delaware on
    May 07, 2004 (incorporated by reference to Exhibit 3.1
    to the Companys Annual report on For
    10-K filed
    on May 27, 2004).3
.2

Amended and Restated Bylaws,
    amended as of May 18, 2006. (incorporated by reference to
    exhibit 99.1 filed on
    Form 8-K
    on May 18, 2006).4
.1

Form of Indenture (incorporated by
    reference to Exhibit 4.3 to the companys registration
    statement filed on
    Form S-3
    on November 28, 2000).4
.2

Form of Debt Warrant Agreement,
    including form of Debt Warrant Certificate (incorporated by
    reference to Exhibit 4.4 to the companys Registration
    Statement filed on
    Form S-3
    on November 28, 2000).4
.3

Form of Common Stock Warrant
    Agreement, including form of Common Stock Warrant Certificate
    (incorporated by reference to Exhibit 4.5 to the
    Companys Registration Statement filed on
    Form S-3
    on November 28, 2000).4
.4

Form of Senior Debenture
    (incorporated by reference to Exhibit 4.6 to the
    Companys Registration Statement filed on
    Form S-3
    on November 28, 2000).4
.5

Loan and Security Agreement
    between Stratex Networks, Inc. and Silicon Valley Bank dated
    January 21, 2003. (incorporated by reference to exhibit
    number 4.5 to the Companys Annual Report on
    Form 10-K
    for the year ended March 31, 2003).4
.6

Amended and Restated Loan and
    Security Agreement between Stratex Networks, Inc. and Silicon
    Valley Bank, dated January 21, 2004 (incorporated by
    reference to exhibit 10.1 filed on
    Form 8-K
    on January 22, 2004).4
.7

Amendment No. 1 to the
    Restated Loan and Security Agreement between Stratex Networks,
    Inc. and Silicon Valley Bank, dated May 04, 2005
    (incorporated by reference to exhibit 4.7 filed on
    Form 10-K
    on June 14, 2005).4
.8

Amendment No. 2 to Amended
    and Restated Loan and Security Agreement between Stratex
    Networks, Inc. and Silicon Valley Bank, dated August 15,
    2005. (incorporated by reference to exhibit 4.1 filed on
    Form 10-Q
    on November 9, 2005).4
.9

Amendment No. 3 to Amended
    and Restated Loan and Security Agreement between Stratex
    Networks, Inc. and Silicon Valley Bank, dated December 28,
    2005. (incorporated by reference to exhibit 4.1 filed on
    Form 10-Q
    on February 9, 2006).4
.10

Amendment No. 4 to Amended
    and Restated Loan and Security Agreement between Stratex
    Networks, Inc. and Silicon Valley Bank, dated February 27,
    2006.10
.1**

Stratex Networks, Inc. 1984 Stock
    Option Plan, as amended and restated on June 11, 1991
    (incorporated by reference to Exhibit 10.1 to the
    Companys Annual Report on
    Form 10-K
    for the year ended March 31, 1991).10
.2**

Form of Installment Incentive
    Stock Option Agreement (incorporated by reference to
    Exhibit 28.2 to the Companys Registration Statement
    on
    Form S-8
    (File
    No. 33-43155)).10
.3**

Form of Installment Non-qualified
    Stock Option Agreement (incorporated by reference to
    Exhibit 28.3 to the Companys Registration Statement
    on
    Form S-8
    (File
    No. 33-43155)).10
.4**

Form of Indemnification Agreement
    between the Company and its directors and certain officers
    (incorporated by reference to Exhibit 10.16 to the
    Companys Registration Statement on
    Form S-1
    (File
    No. 33-13431)).10
.5**

Stratex Networks, Inc. 1994 Stock
    Incentive Plan, as amended and restated on May 1, 1996
    (incorporated by reference to the Companys Proxy Statement
    for the Annual Meeting of Stockholders to be held on
    August 4, 1998).10
.6**

Stratex Networks, Inc. 1994 Stock
    Incentive Plan, as amended and restated on May 1, 1996
    (incorporated by reference to the Companys Proxy Statement
    for the Annual Meeting of Stockholders to be held on
    August 4, 1998).




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##### Table of Contents



ExhibitNumber

Description10
.7

Stratex Networks, Inc. 1998
    Non-Officer Employee Stock Option Plan (incorporated by
    reference to Exhibit 99.1 to the Companys
    Registration Statement on
    Form S-8
    (File
    No. 333-48535)).10
.8**

Restated Employment Agreement,
    dated as of May 14, 2002, by and between Stratex Networks,
    Inc. and Charles D. Kissner (incorporated by reference to
    exhibit number 10.7 to the Companys Annual Report on
    Form 10-K
    for the year ended March 31, 2003).10
.9

Stratex Networks, Inc. 1999
    Non-Officer Employee Restricted Stock Purchase Plan
    (incorporated by reference to Exhibit 99.1 to the
    companys Registration Statement on
    Form S-8
    (File
    No. 333-76233)).10
.10

Stratex Networks, Inc. 1999
    Employee Stock Purchase Plan (incorporated by reference to
    Exhibit 99.1 to the Companys Registration Statement
    on
    Form S-8
    (File
    No. 333-80281)).10
.11**

Employment Agreement dated as of
    May 14, 2002, by and between the Company and Carl A.
    Thomsen. (incorporated by reference to exhibit number 10.10 to
    the Companys Annual Report on
    Form 10-K
    for the year ended March 31, 2003).10
.12**

Form of Employment Agreement dated
    as of May 14, 2002, by and between the Company and John C.
    Brandt, Carol A. Goudey, Paul Kennard, Shaun McFall, Ryan Panos,
    Robert Schlaefli, Timothy Hansen and John P. ONeil
    (incorporated by reference to exhibit number 10.11 to the
    Companys Annual Report on
    Form 10-K
    for the year ended March 31, 2003).10
.13

Lease, dated February 16,
    2000, by and between Corporate Technology Centre
    Associates II LLC and Stratex Networks, Inc., relating to
    130 Rose Orchard Way, San Jose, California (incorporated by
    reference to Exhibit 10.24 to the Companys Annual
    Report on
    Form 10-K
    for the year ended March 31, 2000).10
.14

Lease, dated February 16,
    2000, by and between Corporate Technology Centre
    Associates II LLC and Stratex Networks, Inc., relating to
    170 Rose Orchard Way, San Jose, California (incorporated by
    reference to Exhibit 10.25 to the Companys Annual
    Report on
    Form 10-K
    for the year ended March 31, 2000).10
.15

Lease, dated February 16,
    2000, by and between Corporate Technology Centre
    Associates II LLC and Stratex Networks, Inc., relating to
    180 Rose Orchard Way, San Jose, California (incorporated by
    reference to Exhibit 10.26 to the Companys Annual
    Report on
    Form 10-K
    for the year ended March 31, 2000).10
.16**

DMC Stratex Networks, Inc. 2002
    Stock Incentive Plan (incorporated by reference to exhibit
    number 10.15 to the Companys Annual Report on
    Form 10-K
    for the year ended March 31, 2003).10
.17

Placement Agency Agreement between
    Stratex Networks, Inc., and CIBC World Markets Corp., dated
    September 20, 2004. (incorporated by reference to exhibit
    number 10.1 filed on
    Form 8-K
    on September 24, 2004).10
.18**

Employment Agreement, dated as of
    May 16, 2006, by and between Stratex Networks, Inc. and
    Thomas H. Waechter.10
.19**

Employment agreement dated
    April 1, 2006 by and between Stratex Networks, Inc. and
    John Brandt.10
.20**

Amendment A to April 1, 2006
    Employment agreement between Stratex Networks, Inc. and John
    Brandt, dated April 19, 2006.13
.1

Portions of the 2006 Annual Report
    to Stockholders.14
.1

Code of Ethics adopted by the
    Company on November 11, 2003. (incorporated by reference to
    exhibit number 14.1 to the Companys Annual Report on
    Form 10-K
    for the year ended March 31, 2004)21
.1

List of subsidiaries.23
.1

Consent of Independent Registered
    Public Accounting Firm .




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##### Table of Contents



ExhibitNumber

Description24
.1

Power of Attorney (included in
    signature page in this Annual Report on
    Form 10-K).31
.1

Certification of Thomas H.
    Waechter, Chief Executive Officer, pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.31
.2

Certification of Carl A. Thomsen,
    Chief Financial Officer, pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.32
.1

Certification of Thomas H.
    Waechter, Chief Executive Officer, pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.32
.2

Certification of Carl A. Thomsen,
    Chief Financial Officer, pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.     **
    
    Management contract, compensatory plan or arrangement in which
    one or more of our directors or executive officer(s)
    participates.