Slides to be shown during presentations

presentation or disclosure of the information contained within by any unauthorized person is strictly prohibited.

Safe Harbor

This

Presentation

contains

forward-looking

statements,

including

statements

regarding

expected

financial

and

operating

results,

the

divestiture

Avanex

France,

market

and

product

strategy,

market

and

product

outlook,

financial

and

operating

goals

and

initiatives

and

improvements

cost

structure.

Actual

results

could

differ

materially

from

those

projected

contemplated

the

forward-looking

statements.

Factors

that

could

cause

actual

results

differ

include

general

economic

conditions,

the

pace

spending

the

telecommunications

industry

and

particular

the

optical

networks

industry,

market

demand

and

price

our

products,

the

company’s

ability

sufficiently

anticipate

market

needs

and

develop

products

and

enhancements

that

achieve

market

acceptance,

problems

delays

reducing

the

cost

structure

the

company,

including

problems

associated

with

the

divestiture

Avanex

France,

the

company’s

ability

effect

its

restructuring

goals

and

successfully

transfer

operations

lower

cost

regions,

any

slowdown

deferral

orders

for

products,

higher

than

anticipated

expenses

the

company

may

incur

future

quarters

the

inability

identify

expenses

which

can

eliminated.

Please

also

refer

the

risk

factors

contained

the

company’s

SEC

filings

including

the

company’s

Annual

Report

Form

10-K

filed

with

the

SEC

Sept.

28,

2006,

Quarterly

Reports

filed

Form

10-Q

filed

Nov.

2006

and

Feb.

2007

and

subsequent

filings

with

the

SEC.

Avanex

assumes

obligation

and

does

not

intend

update

any

forward-

looking

statements,

whether

result

new

information,

future

events

otherwise.

presentation or disclosure of the information contained within by any unauthorized person is strictly prohibited.

Investment Highlights

•

Telecom Optics Leader

•

Growing Markets

•

Leading Global Customers

•

Low-Cost Operating Model

•

Strong and Sustained Financial Improvements

presentation or disclosure of the information contained within by any unauthorized person is strictly prohibited.

Industry Consolidator

•

Amplifiers and dispersion

compensators

•

Passive module and subsystem leader

•

Optronics business

•

Strong OEM relationships

•

Venture funded start-up

•

Photonic technology business

•

Optical subsystems

•

Transponder leader

1997

2003

Today

CORNING

•

Broad product offering

•

Robust IP portfolio of 591 patents

•

Key telecom OEMs as customers

presentation or disclosure of the information contained within by any unauthorized person is strictly prohibited.

Avanex: Present Day

Bangkok, Thailand

San Donato, Italy

•

Innovation Center and Fab

•

158 Employees

•

Divestiture of fabs

& 138

employees expected to close

in April-May 2007

Nozay, France

•

Headquarters and Innovation

Center

•

116 Employees

Fremont, CA

Horsehead, NY

•

Innovation Center

•

47 Employees

•

Innovation Center

•

113 Employees

•

Centralized Operations Center

•

Logistics for CM Partners

•

172 Employees

Shanghai, China

•

Development Center

•

59 Employees

Dec. 31, 2006:

665 Employees

4 sites in N. America and Europe

2 sites in Asia

Centralized Lower Cost Manufacturing with

Small Development Centers Close to Customers

presentation or disclosure of the information contained within by any unauthorized person is strictly prohibited.

Consolidation Performance

•

Revenue

•

Average

annual

growth

26%

(a)

•

Gross margin

•

3.5 points average improvement per quarter

(b)

(a)

FY2004 compared with Q2FY2007 Trailing Twelve Months (TTM)

(b)

Q2FY2007 compared to Q4FY2004

presentation or disclosure of the information contained within by any unauthorized person is strictly prohibited.

Operating Model

Hybrid R&D

Low Cost Manufacturing

•

Contract Manufacturing

•

Centralized Supply Chain

Management

•

Leverage Engineering Talent in

Asia

•

Higher Levels of Productivity

•

Increase Time in Market

•

Ability to Scale Quickly

•

Increased Productivity

•

Increased R&D Effectiveness

•

Improved Financial Performance

Demonstrated Achievements

presentation or disclosure of the information contained within by any unauthorized person is strictly prohibited.

Market Strategy

•

Optical communications equipment leader

•

Strong module and subsystem provider

•

Optical design, software and controls as key differentiators

•

Possess key component technologies

•

Highly differentiated products

•

Increase margin

presentation or disclosure of the information contained within by any unauthorized person is strictly prohibited.

Metro & Long Haul Markets

•

Estimate metro to grow approximately 14% in CY2007

•

Estimate long haul to grow approximately 11% in

CY2007

•

General agreement with overall market surveys

•

Strong demand for low-cost solutions that enable

flexible networks

•

Modules and subsystems that integrate functionality

•

First half of CY2007 flat market demand with growth in

the latter half of year

presentation or disclosure of the information contained within by any unauthorized person is strictly prohibited.

Global Optical Systems Market

Other

12%

NEC

Alcatel /

Lucent

18%

Huawei

15%

Ericsson /

Marconi

12%

Nortel

10%

Tellabs

Siemens

Fujitsu

Cisco

ZTE

Source: IDC, 2006.

2005 Optical System Estimates

presentation or disclosure of the information contained within by any unauthorized person is strictly prohibited.

Telecom Link

“Mux/Demux”

Combines different optical signals onto one fiber

“Optical Amplifier”

Boosts optical strength

for long distance links

“Dispersion Compensation”

Fixes signal degradation

associated with long distances

“Add/Drop”

Allows carrier to put on, or take off, data streams

“Transceiver/Transponder”

Sends and receives optical signal

presentation or disclosure of the information contained within by any unauthorized person is strictly prohibited.

Recent Product Announcements

March 7, 2006

10G XFP-E MSA

March 3, 2006

DQPSK Modulator

February 28, 2006

Pluggable EDFA

March 2, 2006

OPM Portfolio

March 14, 2006

L-Band Tunable TXP

March 28, 2006

Low Loss DCM

March 21, 2006

1x4 Compact Switch

April 11, 2006

Ultra-thin EDFA

April 4, 2006

Ultra Low Voltage Mod

May 16, 2006

Optical Protection Switch

Sept. 25, 2006

Integrated Amplifier

presentation or disclosure of the information contained within by any unauthorized person is strictly prohibited.

Leader in Markets

Diverse technical strengths spanning from optical to software and

electrical to mechanical

Technical Expertise

Network Managed

Subsystems

Amplification and

Dispersion Compensation

Micro-Optics

LiNbO

Fiber Bragg Grating

Optical Interfaces

GaAs

InP

Experienced technology and business leader

Experienced innovation leader

Leader in advanced modulation schemes and secure communication

technologies, including quantum cryptography and photonic firewalls

Product line to be divested.

Filters for applications ranging from

submarine and terrestrial pumps

Highly differentiated solutions for metro and long-haul applications

Product line to be divested.

Terrestrial and submarine pump lasers

Product line to be divested.

Avanex is a Market Leader in Network Managed Subsystems, Optical

Amplification, Dispersion Compensation, Micro-

Optics, LiNbO

and FBG

Position

Market

Leader

(a)

Market

Leader

(a)

Market

Leader

(a)

Market

Leader

(a)

Market

Leader

(a)

Growing

Presence

Growing

Presence

Historical

Leadership

Key Points

(a) Market

leader

defined

the

top

three

vendors

given

technical

expertise.

presentation or disclosure of the information contained within by any unauthorized person is strictly prohibited.

Financials Improving

(a) Non-GAAP adjustments remove the effect of non-recurring events and stock-based compensation. Please see tables of

reconciliation of GAAP Net Loss Per Share to Non-GAAP Net Loss Per Share at the end of this presentation.

Non-GAAP Net Loss Per Share

(a)

($0.13)

($0.11)

($0.09)

($0.07)

($0.05)

($0.03)

($0.01)

$0.01

presentation or disclosure of the information contained within by any unauthorized person is strictly prohibited.

Q2FY2007 Highlights

•

Record Revenue of $55.6M

•

Year-over-year increase of 54%

•

Sequential growth of 9%

•

Record gross margin of 19%

•

Nine percentage point increase from Q1FY2007

•

Five programs implemented to improve margin

•

Non-GAAP net loss decreased 50% to $3.5M or $0.02

per share

(a)

(a) Non-GAAP adjustments remove the effect of non-recurring events and stock-based compensation. Please see tables of

reconciliation of GAAP Net Loss Per Share to Non-GAAP Net Loss Per Share at the end of this presentation.

presentation or disclosure of the information contained within by any unauthorized person is strictly prohibited.

Divestiture and Financing

•

Strong improvement in profitability

•

Divests

high

fixed-cost

III-V

fabs

France

•

Expected to save $12M to $16M annually beginning in Q4FY2007

•

Quarterly savings of $3M to $4M

•

Expected to close in the mid-April to May timeframe

•

Minimal revenue impact

•

Divested revenue streams represented ~$3M in Q2FY2007

•

Produces solid balance sheet

•

Raised $20 million in equity PIPE to fund divestiture

•

Payments to purchasers of French fabs

at closing will total ~$17M

•

Will remove restructuring liabilities in France

•

Convertible debt eliminated through conversion; company now

free of debt

(a) Non-GAAP adjustments remove the effect of non-recurring events and stock-based compensation. Please see tables of

reconciliation of GAAP Net Loss Per Share to Non-GAAP Net Loss Per Share at the end of this presentation.

presentation or disclosure of the information contained within by any unauthorized person is strictly prohibited.

Path to Profitability

•

We expect to achieve non-GAAP profitability the first

quarter following the divestiture of our French fabs

(a)

•

The GAAP accounting of the divestiture, including one-

time charges, has not yet been finalized, but we will

provide that information as available

(a)

Non-GAAP adjustments remove the effect of non-recurring events, including restructuring charges associated with the divestiture of

our

French

fabs,

and

stock-based

compensation.

Please

refer

the

“safe

harbor”

language

the

beginning

this

presentation.

presentation or disclosure of the information contained within by any unauthorized person is strictly prohibited.

Consolidated Income Statement

($ in millions, except per share data)

Revenue

Gross Margins (GAAP)

SG&A and R&D

(a)

Non-GAAP Net Earnings / (Loss) Per Share

(b)

Note: Fiscal Year ended 6/30.

(a) Includes stock-based compensation.

(b) Non-GAAP adjustments remove the effect of non-recurring events and stock-based compensation.

(c) Includes $2.1 million in legal, accounting and consulting expenses related to transactions that were not completed. Without

these expenses, SG&A and R&D was 30% of revenue.

Please see reconciliation tables of GAAP Net Loss Per Share to Non-GAAP Net Loss Per Share at the end of this presentation.

$50.9

10%

29%

($0.03)

FY 2006

$36.1

33%

($0.07)

$40.1

31%

($0.06)

$45.5

28%

($0.04)

FY 2007

$55.6

19%

34%

($0.02)

(c)

presentation or disclosure of the information contained within by any unauthorized person is strictly prohibited.

Improving Productivity

Global Headcount

Improved Productivity

Note: Employees include full-time employees, contractors and temps.

HC in Asia

Revenue

Revenue Per

U.S. / Eur. HC

Per HC

HC in U.S. & Eur.

200

400

600

800

1000

1200

Q1'05

Q2'05

Q3'05

Q4'05

Q1'06

Q2'06

Q3'06

Q4'06

Q1'07

Q2'07

100

200

300

400

500

600

Q1'05

Q2'05

Q3'05

Q4'05

Q1'06

Q2'06

Q3'06

Q4'06

Q1'07

Q2'07

presentation or disclosure of the information contained within by any unauthorized person is strictly prohibited.

Balance Sheet Summary

12/31/05

3/31/06

6/30/06

9/30/06

12/31/06

Assets

Cash

48.0

82.1

74.3

61.9

57.9

Accounts receivable, net*

29.3

33.3

37.2

49.8

52.6

Inventories, net

30.4

30.1

18.4

17.0

21.9

Property and equipment, net

6.7

6.1

5.7

6.0

6.1

Liabilities

Accounts payable*

36.4

39.5

42.8

44.7

52.7

Accrued restructuring

30.5

23.9

19.6

18.2

17.5

Convertible notes

26.7

6.1

4.6

4.3

4.4

Shareholders Equity

20.9

79.5

73.3

66.6

59.4

*Including related party amounts

presentation or disclosure of the information contained within by any unauthorized person is strictly prohibited.

Investment Highlights

•

Telecom Optics Leader

•

Growing Markets

•

Leading Global Customers

•

Low-Cost Operating Model

•

Strong and Sustained Financial Improvements

presentation or disclosure of the information contained within by any unauthorized person is strictly prohibited.

Reconciliation Table

Note: Fiscal Year ended 6/30.

(a) Non-GAAP adjustments remove the effect of non-recurring events and stock-based compensation.

NON-GAAP NET LOSS

Q1/FY05

Q2/FY05

Q3/FY05

Q4/FY05

Q1/FY06

Q2/FY06

Q3/FY06

Q4/FY06

Q1/FY07

Q2/FY07

Net loss, GAAP

(22,322)

(24,351)

(18,886)

(42,812)

(16,923)

(18,543)

(10,167)

(9,059)

(9,714)

(8,553)

Adjustments to measure non-GAAP:

Amortization of intangibles

1,239

1,242

2,000

1,765

1,385

1,386

912

852

656

Share-based payments

157

442

618

1,242

2,150

1,888

1,813

Restructuring, without share-based payments

2,588

5,441

21,229

2,926

140

(1,252)

(70)

433

(Gain) loss on disposal of property and equipment

(1,476)

(410)

(775)

(2,486)

(1,810)

(20)

(28)

Due diligence expenses related to abandoned acquisition activity

2,146

Excess, obsolete RoHS

951

Loss on debt refinancing

4,525

Write-off of investment [in Gemfire, which was included in Other

Expense in Q4/05]

4,400

Non-GAAP Net Loss

(18,412)

(18,987)

(17,987)

(15,074)

(14,680)

(9,864)

(8,934)

(9,059)

(7,064)

(3,533)

Non-GAAP net loss per share -

basic and diluted

(0.13)

(0.12)

(0.10)

(0.07)

(0.06)

(0.04)

(0.03)

(0.02)

presentation or disclosure of the information contained within by any unauthorized person is strictly prohibited.

ADVA

and

the

ADVA

logo

are

registered

trademarks

ADVA

Optical

Networking.

Alcatel

and

the

Alcatel

logo

are

registered

trademarks

Compagnie

Financière

Alcatel.

CIENA

and

the

CIENA

logo

are

registered

trademarks

CIENA

Corporation.

Cisco

and

the

Cisco

logo

are

registered

trademarks

Cisco

Systems,

Inc.

Fujitsu

and

the

Fujitsu

logo

are

registered

trademarks

Fujitsu

Limited.

Huawei

and

the

Huawei

logo

are

registered

trademarks

Huawei

Technologies

Co.,

Ltd.

Lucent

and

the

Lucent

logo

are

registered

trademarks

Lucent

Technologies,

Inc.

Marconi

and

the

Marconi

logo

are

registered

trademarks

Marconi

Corporation

plc.

Nortel

and

the

Nortel

logo

are

registered

trademarks

Nortel

Networks

Limited.

Siemens

and

the

Siemens

logo

are

registered

trademarks

Siemens

AG.

Tellabs

and

the

Tellabs

logo

are

registered

trademarks

Tellabs.

Zhone

and

the

Zhone

logo

are

registered

trademarks

Zhone

Technologies.

ZTE

and

the

ZTE

logo

are

registered

trademarks

ZTE

Corporation.