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Optical communications component and module maker Avanex Corp of Fremont, CA, USA has filed an arbitration complaint in New York alleging breaches by 3S Photonics of its obligations, including prematurely terminating an exclusive distribution agreement.

Telecom laser chip and module maker 3S Photonics of Marcoussis, France was founded in 1994 as Alcatel Optronics S.A. (a subsidiary of the Alcatel group) and was acquired in 2003 by Avanex Corp of Fremont, CA, USA, becoming Avanex France S.A. Last April, it was bought by Alexandre Krivine and Didier Sauvage and renamed 3S Photonics.

Avanex expects that, as a result of the termination of the distribution agreement, revenue for its fiscal second-quarter 2008 (to end-December 2007) will be $51-53m, down on $54.7m last quarter and $55.6m a year ago, and below the low end of its guidance given in early November of $56-58m. Avanex believes that gross margin will generally be consistent with last quarter.

Avanex does not expect to receive future distribution revenue associated with 3S, which will also reduce its fiscal third-quarter revenue (to flat to slightly lower than the fiscal second quarter).

Avanex plans to release its fiscal second quarter results in late January or early February 2008.

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