Three shareholders that together hold about a 19 percent stake in Occam Networks Inc. (Nasdaq: OCNW) are opposing the company's pending merger with Calix Inc. (NYSE: CALX).

In a letter emailed to Occam chairman Steve Krausz today, the shareholders -- Michael Steinhardt, Herbert Chen, and Derek Sheeler -- voice their disapproval of Occam's decision to sell itself now "just as revenues are beginning to ramp."

"We believe that the board of directors of Occam has acted, once again, with reckless and wanton disregard for its shareholders, and we hereby demand that the board move immediately to open up the sales process by auctioning the company to the highest bidder," the letter states.

The letter also cites a Light Reading article -- "Did Calix Get a Bargain on Occam?" -- as an indication that some are perhaps wondering if Occam sold itself short. [Ed. note: The article didn't express an investment opinion, of course. It explored how one company paying a premium of more than 40 percent for another could be considered a bargain.]

The 14-page letter makes it clear Occam's shareholders are challenging "both the process and the price" of a combination with Calix. The shareholders even accuse Occam's management of making "no attempt" to "shop the company or even check the market."

"So, while it’s easy to understand why Carl Russo, the CEO of Calix, would want to buy Occam and consolidate his market share in front of such an opportunity, it’s not quite so clear why you would want to sell at such a time, and for no premium at that," the letter states. "In 1999, Carl sold Cerent, then a nascent three year old company, to Cisco for $6.9 billion. Clearly, he knows a once in a lifetime opportunity when he sees it. Just as clearly, you don’t."

Ouch.

Then, just before recounting Occam's accounting scandal -- the event that made the company No. 1 in our list of "2007 Top Ten: Share Shrinkers" -- the shareholders really pour on the sugar: "Simply put, we believe the history of corporate governance at Occam is a history of abject and utter failure."

Occam execs could not be immediately reached for comment on this story. Calix execs, through an outside PR agency, via email, say they haven't seen the shareholder letter and do not comment on ongoing financial or legal activities.

— Phil Harvey, Editor-in-Chief, Light Reading