The restructuring pains are continuing at Avanex Corp. (Nasdaq: AVNX), as the company’s stock took a 14 percent hit today after the company lowered its earnings forecast.

For its second quarter, which ended Dec. 30, Avanex expects to report revenues between $35 million and $37 million. That’s well off the mark of $41 million to $45 million set by the company late last year.

The news dropped Avanex shares 17 cents (14%) to $1.02 by early afternoon.

Officials said the shortfall came from complications in transferring some manufacturing to a contract firm after Avanex had closed its Erwin Park, N.Y., facility. Like component competitors Bookham Inc. (Nasdaq: BKHM; London: BHM) and JDSU (Nasdaq: JDSU; Toronto: JDU), Avanex is trying to trim costs by using contract manufacturers and Asian facilities.

The company didn’t give specifics about what went wrong.

Optical components firms have been struggling to regain equilibrium after suffering in the telecom recession, and Avanex continues to get its share of strife. Late last year, Avanex’s auditors opened questions about the company’s long-term viability; separately, Avanex had to placate bondholders that issued notices of default. (See Avanex Concerns Continue and More Trouble for Avanex.)

Snippets of good news had come from Avanex’s corner lately. The company renewed its contract with key customer Alcatel (NYSE: ALA; Paris: CGEP:PA). Moreover, investor Corning Inc. (NYSE: GLW) reportedly began a long-awaited selloff of Avanex shares, removing what some analysts called an “overhang” on the stock. (See Bookham, Avanex Shore Up and Corning May Sell Avanex Stake.)

Avanex has at least gotten its gross margins into positive territory, although officials said today that the company won’t make its goal of gross margins exceeding 10 percent.

Cash flow is going to be critical to Avanex in the coming year. The company says it used $8 million cash in its second quarter, compared with $20 million in its first quarter. Avanex expects to report a cash level around $46 million for the second quarter, compared with $54 million for the previous quarter.

— Craig Matsumoto, Senior Editor, Light Reading