Avanex Files Arbitration Complaint Against 3S Photonics

    Updates Guidance for Fiscal 2008 Second Quarter

    FREMONT, CALIF., December 27 /CNW/ - Avanex Corporation (NASDAQ:  AVNX), a
pioneer of intelligent photonic solutions that enable next-generation optical
networks, today reported that it filed an arbitration complaint in New York
against 3S Photonics, of Marcoussis, France. The arbitration complaint alleges
various breaches by 3S Photonics of its obligations to Avanex, including that
3S Photonics prematurely terminated its exclusive distribution agreement with

    As a result of 3S Photonics' termination of the distribution agreement,
Avanex expects that revenue for the second fiscal quarter of 2008, ending
December 31, 2007, will be in the range of USD 51 - USD 53 million, compared
to USD 54.7 million in the prior quarter and USD 55.6 million in the second
quarter of fiscal 2007 and will fall below the low end of its earlier
announced guidance for the quarter of USD 56 - USD 58 million. Avanex does not
expect to receive future distribution revenue associated with 3S Photonics,
which will reduce Avanex's revenue for the third fiscal quarter, resulting in
flat to slightly lower revenues for the third fiscal quarter compared to the
second fiscal quarter. Avanex believes gross margins for the second fiscal
quarter will generally be consistent with the prior quarter.

    Avanex will present at the Needham Conference in New York January 8th,
2008, at 4:30 pm EST. Avanex plans to release its second fiscal quarter
results and hold a conference call to discuss its business outlook in late
January or early February 2008.

    About Avanex Corporation

    Avanex Corporation is a leading global provider of Intelligent Photonic
Solutions(TM) to meet the needs of fiber optic communications networks for
greater capacity, longer distance transmissions, improved connectivity, higher
speeds and lower costs. These solutions enable or enhance optical wavelength
multiplexing, dispersion compensation, switching and routing, transmission,
amplification, and include network-managed subsystems. Avanex Corporation was
incorporated in 1997 and is headquartered in Fremont, Calif. Avanex
Corporation also maintains facilities in Horseheads, N.Y.; Melbourne, Fla.;
Shanghai; Villebon Sur Yvette, France; San Donato, Italy; and Bangkok. To
learn more about Avanex Corporation, visit our web site at: www.avanex.com.

    Forward-looking Statements

    This press release contains forward-looking statements including
statements regarding expected second quarter and third quarter of fiscal 2008
outlook and operating results, market demand and growth trends for our
products and our strategies. Actual results could differ materially from those
projected in or contemplated by the forward-looking statements. Factors that
could cause actual results to differ include the company's ability to close
business as expected this quarter in general and as a result of this press
release, adjustments made in connection with closing the quarter and releasing
financial statements, general economic conditions, the pace of spending in the
telecommunications industry and in particular the optical networks industry,
market demand and price of our products, the company's ability to sufficiently
anticipate market needs and develop products and enhancements that achieve
market acceptance, problems related to realizing the benefits of the
divestiture in France, the company's ability to effect its restructuring
goals, unanticipated costs and expenses or the inability to identify expenses
which can be eliminated, any slowdown or deferral of orders for products or
the application of accounting or tax principles in an unanticipated manner.

    Finally, please refer to the risk factors contained in the company's SEC
filings including the company's Annual Report on Form 10-K filed with the SEC
on Sept. 7, 2007, Quarterly Report on Form 10-Q filed with the SEC on Nov. 2,
2007 and subsequent filings with the SEC.

    Avanex assumes no obligation and does not intend to update any
forward-looking statements, whether as a result of new information, future
events or otherwise.

For further information:

For further information: Avanex Corporation Marla Sanchez, 510-897-4312
Chief Financial Officer Marla_Sanchez@Avanex.com Cheryl Williams, 510-897-4250
Investor Relations Liaison Cheryl_Williams@Avanex.com

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