Emcore Corp. (Nasdaq: EMKR) is getting out of the data communications business, and Sumitomo Electric Device Innovations USA Inc. (SEDU) -- a larger optical player -- is getting in.

Emcore is selling its vertical-cavity surface emitting laser (VCSEL) product lines to Sumitomo for $17 million cash, the companies announced Wednesday morning. Emcore will hang on to its telecom optics business, which includes its tunable XFP modules and 40Gbit/s and 100Gbit/s modules.

Why this matters
That's twice in a week that someone has mentioned getting into VCSEL-based modules, going up against Avago Technologies Pte. and Finisar Corp. (Nasdaq: FNSR).

Oclaro Inc. (Nasdaq: OCLR) wants to use its pending acquisition of Opnext Inc. (Nasdaq: OPXT) to take another shot at the market for VCSEL-based modules, Oclaro CEO Alain Couder noted on Monday's conference call with analysts.

For Emcore, the deal is a chance to control its cash burn and sharpen the focus on telecom optics, writes analyst Ed Zabitsky of ACI Research in a report issued Wednesday. Emcore has a better chance of standing out in telecom, with leading-edge products such as tunable XFPs, than in datacom.

As for the cash burn issue -- for its second quarter, which ended in March, Emcore is expected to lose $1.56 per share on revenues of $38.5 million, according to analysts polled by Thomson Reuters . Emcore was one of the companies whose manufacturing was disrupted by last year's floods in Thailand.

For more

• Oclaro & Opnext Strive for Scale
• More Tunable XFPs Start Shipping
• Who Makes What: Tunable XFPs

— Craig Matsumoto, Managing Editor, Light Reading