Finisar Announces 3Q Results

Approximately $8 million was from increased shipments of the Company's SFP+, XFP and X2 transceivers for 10 Gbps Ethernet and Sonet applications.

Approximately $2 million was from the sale of 40 Gbps 300 pin transponders that we were unable to ship in the second quarter due to firmware problems. Those problems were corrected and the products were shipped in the third quarter.

Net loss of $10.6 million, or $.03 per share, compares to a net loss of $9.8 million, or $.03 per share, in the second quarter and breakeven, or $.00 per share, in the third quarter of the prior year. However, included in the net loss for the current quarter was a charge of $7.4 million related to the completion of the investigation into our historical granting practices and an accrual for employee and employer tax liabilities arising from that investigation. These charges affected both gross profit and operating expenses in the quarter.

Gross margin of 33.4% increased sequentially from 31.6% in the second quarter but was down from 36.6% in the third quarter of the prior year.

Cash and short-term investments, plus other long-term investments which can be readily converted into cash, increased $7.5 million from $114.9 million at October 28, 2007, to $122.4 million at January 27, 2008. The Company has classified certain of its investments as long-term based on its intent to hold these securities until maturity, although they can be readily sold if required.