On the surface, it looks like Emcore Corp. (Nasdaq: EMKR) got a sweet deal by selling its optical business into a joint venture.

The company announced today that Chinese firm Tangshan Caofeidian Investment Corporation (TCIC) is buying 60 percent of the optical business to create Emcore Fiber Optics (EFO), a joint venture to be based in China and registered in Hong Kong. Emcore would own the remaining 40 percent. (See Emcore Creates Optical JV.)

TCIC is paying Emcore $27.8 million and adding another $27 million in funding to the joint venture, to be called Emcore Fiber Optics (EFO).

If you figure that $54.8 million is being put into 60 percent of the business, that values Emcore's optical division at $91 million. And that's more than the entire company's $90 million valuation -- as measured after today's gain of 10 cents (9.8%); Emcore closed at $1.12 per share.

"It seems like a pretty good deal for Emcore," says Andrew Schmitt, an analyst with Infonetics Research Inc. "In any deal, one party knows more than the other, and -- well, my money's on Emcore here."

The deal turns Emcore into primarily a supplier of solar-power components. The company had considered splitting its optical and solar halves in 2008, but never acted upon the idea. (See Emcore Preps Solar Separation.)

Certain Emcore executives and employees will transfer to EFO. Among them will be Reuben Richards, who will resign as Emcore's executive chairman to become EFO's CEO.

Among the optical products not being transferred to EFO are satellite-related components and Emcore's specialty optics division, which includes defense-related parts.

It's the second time this week a telecom company has headed for China, the first being UTStarcom Inc. (Nasdaq: UTSI). (See UTStarcom Packs for China.) The differences are rife, though: UTStarcom is no longer in optical; had already announced plans to relocate to Beijing; and has always done a substantial amount of its business in China.

— Craig Matsumoto, West Coast Editor, Light Reading