Alcatel-Lucent (NYSE: ALU) has cut the last ownership ties with its former components division, having sold its 12.4 percent stake in Avanex Corp. (Nasdaq: AVNX).

The buyer was Pirelli SpA (Milan: PECI.MI), which has revitalized its optical communications division since fading into the background during the dotcom meltdown. (See Pirelli Buys Avanex Stake.)

Avanex announced the transaction today, along with news that Alcatel-Lucent has extended its supply contract by three more years. AlcaLu also signed a supply contract with Pirelli, according to Avanex's press release.

Pirelli's purchase price was not disclosed, but based on Avanex's $1.68-per-share closing price Friday, a 12.4 percent stake would be worth about $47.2 million.

Avanex shares today were up $0.20 (11.9%) to $1.88 in midafternoon trading.

It seems like ancient history, but seven years ago, Avanex was a star of the then-hot optical sector. At its peak, the company got pushed to valuations in the billions, as pundits like George Gilder put their weight behind the optical revolution. (See Avanex: Is it Worth $10 Billion? and Avanex (AVNX).)

By 2002, the optical market was getting toppled, and big firms wanted out of components. Avanex snared Alcatel Optronics and pieces of the Corning Inc. (NYSE: GLW) components division in 2003, seeing a chance to build up breadth in preparation for a telecom revival. (See Avanex to Buy Alcatel, Corning Units.)

Alcatel and Corning got stakes in Avanex as part of that deal. Corning sold off the last of its shares in late 2005.

Avanex struggled after the Alcatel/Corning sale -- as did Bookham Inc. (Nasdaq: BKHM; London: BHM), which had bought up the Nortel Networks Ltd. components division. By 2005, both were struggling with their cash positions, having inherited some high burn-rates with their acquisitions. (See Bookham, Avanex Shore Up.)

Pirelli, meanwhile, is continuing a comeback of sorts. The company sold its optical components division to Cisco Systems Inc. (Nasdaq: CSCO) and Corning in 2000 but has spent the last few years getting back into the game. Lately, Pirelli Broadband Solutions has been at tradeshows demonstrating tunable transceivers. (See Pirelli Returns , Pirelli Intros New XFP, and Pirelli Demos WDM-PON.)

— Craig Matsumoto, West Coast Editor, Light Reading