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Company Posts 17% Sequential Revenue Growth and Net Income Increase

Fremont, Calif., October 26, 2006 -- Oplink Communications, Inc. (Nasdaq: OPLK), a leading photonic components, intelligent modules, and subsystems solution provider, today reported financial results for the first quarter of fiscal 2007 ended September 30, 2006.

For the first quarter of fiscal 2007, Oplink reported revenues of $19.7 million, an increase of 85% over the prior year and 17% over the prior quarter. Net income for the first quarter was $2.8 million, or $0.12 per diluted share, in accordance with accounting principals generally accepted in the United States (GAAP). This compares to a GAAP net loss of $440,000, or ($0.02) per diluted share, reported in the first quarter of fiscal 2006 and GAAP net income of $1.9 million, or $0.09 per diluted share, reported in the fourth quarter of fiscal 2006.

Non-GAAP net income for the first quarter of fiscal 2007 was $3.8 million, or $0.17 per diluted share, which excludes $1.1 million in stock compensation expense. This compares to non-GAAP net income of $157,000, or $0.01 per diluted share, reported in the first quarter of fiscal 2006, which excludes $597,000 of stock compensation expense and non-GAAP net income of $2.7 million, or $0.12 per diluted share, which excludes $829,000 in stock compensation expense and a benefit of $72,000 for restructuring costs and other charges.

Oplink closed the quarter with $191.5 million in cash, cash equivalents and short and long-term investments.

"We remain enthusiastic about the overall favorable market conditions which, along with our quality and productivity enhancements, contributed to revenue and margin growth in the quarter," commented Joe Liu, president and CEO of Oplink. "Our customers continue to look to Oplink to provide reliable and cost competitive passive optical-centric components and subsystems solutions.

"As we look to the second quarter, we are encouraged by recent announcements about carrier spending activity which is leading to greater visibility and bookings for Oplink. We are confident in our ability to increase revenues and further improve our operating model," concluded Mr. Liu.

Business Outlook

The Company anticipates revenue in the second quarter of fiscal 2007 to be approximately 12% higher than the first quarter of fiscal 2007. In addition, Oplink expects to generate earnings per diluted share in the range of $0.13 to $0.14 on a GAAP basis. On a non-GAAP basis, excluding stock compensation expense and non-recurring charges, if any, the Company expects earnings per diluted share in the range of $0.18 to $0.19.

Oplink presents each of the fiscal quarters and fiscal year end as if it ended on the last day of each calendar quarter or twelve-month period, respectively. Oplink operates and reports using interim fiscal quarters and twelve-month periods, which end on the Sunday closest to the end of each calendar quarter and twelve-month period. October 1 was the Sunday closest to the period ended September 30, 2006. Historical per share data appearing above have been appropriately adjusted to reflect the one-for-seven (1-for-7) reverse stock split effected on November 9, 2005.

Conference Call Information

The Company will host a corresponding conference call and live webcast at 2:00 p.m. Pacific Time on October 26, 2006. To access the conference call, dial (800) 366-7417 for the US or Canada and (303) 262-2125 for international callers. The webcast will be available live on the Investor Relations section of the Company's corporate website at http://investor.oplink.com and via replay beginning approximately two hours after the completion of the call until the Company's announcement of its financial results for the next quarter. An audio replay of the call will also be available to investors beginning at approximately 5:00 p.m. Pacific Time on October 26, 2006 until 11:59 p.m. Pacific Time on October 29, 2006, by dialing (800) 405-2236 ((303) 590-3000 for callers outside the U.S. and Canada) and entering pass code 11072874.

Non-GAAP Financial Measures

In this earnings release and during our earnings conference call and webcast as described above, we use or plan to discuss certain non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. A reconciliation between non-GAAP and GAAP measures can be found in the accompanying tables. We believe that, while these non-GAAP measures are not a substitute for GAAP results, they provide a basis for evaluating the Company's cash requirements for ongoing operating activities. These non-GAAP measures have been reconciled to the nearest GAAP measure as required under Securities and Exchange Commission rules. We compute non-GAAP net income (loss) by adjusting GAAP net income (loss) for merger fees, stock compensation expense, write down of assets held for sale, in-process research and development and restructuring costs and other charges.

About Oplink

Incorporated in 1995, Oplink is a leading provider of design, integration and optical manufacturing solutions (OMS) for optical networking components and subsystems. The Company offers advanced and cost-effective optical-electrical components and subsystem manufacturing through its facilities in Zhuhai and Shanghai, China. In addition, Oplink maintains a full complement of optical-centric front-end design, application, and customer service functions at its headquarters in Fremont, California. The Company's customers include telecommunications, data communications and cable TV equipment manufacturers around the globe. Oplink is committed to providing fully customized, photonic foundry services incorporating its subsystems manufacturing capabilities. To learn more about Oplink, visit its web site at: http://www.oplink.com/.

Cautionary Statement

This news release contains forward-looking statements, including without limitation statements regarding Oplink's ability to increase revenue and profitability in the second quarter of fiscal 2007, the guidance given for anticipated revenue and earnings per share for the second quarter of fiscal 2007, anticipated favorable market conditions and the anticipation that Oplink's customers will continue to look to Oplink to provide their components and subsystems capabilities for their carrier customers, that involve risks and uncertainties, which may cause results to differ substantially from expectations. These risks include, but are not limited to, the potential widespread downturn in the overall economy in the United States and other parts of the world and the telecommunications industry, including reductions in telecommunication spending activity, possible reductions in customer orders, challenges to successfully integrate and realize anticipated benefits of acquisitions of businesses or technologies, Oplink's reliance upon third parties to supply components and materials for its products, intense competition in Oplink's target markets and potential pricing pressure that may arise from changing supply-demand conditions in the industry, the need to retain and motivate key personnel, and other risks detailed from time to time in Oplink's periodic reports filed with the Securities and Exchange Commission, including the Company's latest Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

The foregoing information represents Oplink's outlook only as of the date of this press release, and Oplink undertakes no obligation to update or revise any forward-looking statements, whether as a result of new developments or otherwise.

Financial Tables

Investor Relations:
Erica Abrams
The Blueshirt Group for Oplink

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