Avanex Opens in Thailand

FREMONT, Calif. -- Avanex Corporation (Nasdaq: AVNX), pioneer of intelligent photonic solutions that enable next-generation optical networks, today unveiled its Operations Center located near Bangkok, Thailand.

The Operations Center in Thailand embodies Avanex's commitment to increase overall customer satisfaction and improve its operating performance by providing innovative, high quality products and services at a low cost. The facility will centralize global manufacturing and operational overhead functions in a low-cost region, dramatically reducing the company's fixed overhead cost structure.

"The Operations Center gives us the capability to meet our customers' needs and substantially reduce both our fixed and direct costs of manufacturing," Jo Major, Avanex President and CEO commented. "The consolidation of our operational infrastructure, with both production and technical staff near our contract manufacturing partners, will also result in faster product introductions. I am pleased to relay that customer feedback to our plan, which includes a focus on continuity of supply during this period, has been very positive."

The opening of the Operations Center is a significant milestone in an overall plan to reach profitability. Through this strategy, the company believes that it will see meaningful improvements in gross margins over the next year, as direct and fixed manufacturing costs are reduced throughout its North American and European locations. The Operations Center, coupled with the North American actions announced last December, is expected to reduce the cost structure of Avanex by $8 to $12 million per year when fully implemented. The first full quarter of savings is expected in the second quarter of fiscal 2006.

In December 2004, Avanex announced a planned workforce reduction of more than 200 employees from its North American sites, as the company executed on its strategic operating plan to outsource manufacturing to low-cost areas. The introduction of the Thailand Operations Center allows the company to transfer further activities from all facilities, which should improve the cost structure in future quarters.

Avanex Corp.