Oclaro Inc. (OCLR) recently reported revenues of $85.1 millionin the first quater of 2010, up from $72.0 million in the year-ago quarter. The year-ago quarter includes two months of revenues of Avanex Corporation. The reported revenue came in line with management’s revised guidance of revenues between $82 million and $87 million.

Oclaro Inc. was formed in April 2009 combining Bookham Inc. and Avanex Corporation. Oclaro, a Delaware corporation, designs, manufactures and markets optical components, modules and subsystems that generate, detect, amplify, combine and separate light signals principally for use in high-performance fiber optics communication networks.

Gross margin came in at 26% up from 25% in the year-ago quarter. Operating income came in at $1.3 million compared to an operating loss of $2.0 million in the year-ago quarter. Adjusted EBITDA (Earnings before interest, tax, depreciation, and amortization) was $3.8 million compared to $0.7 million in the year-ago quarter.

The company reported a net loss of $0.1 million in the quarter. Oclaro ended the quarter with cash and equivalents of $48 million and no debt.

Going forward, management expects revenues between $87 million and $92 million in the second quarter of fiscal 2010. Although visibility remains limited in the short-term, management cautioned that supply issues only will somewhat constraint top-line growth in the December quarter. Gross margin is estimated between 25% and 28%. The company expects to generate cash from operations in the December quarter.

Management added that the integration (Avanex and Bookham) remains on track and the company would focus on achieving profitability in the coming quarters.

The merger should give the new entity critical mass in terms of Research & Development investment and meaningful operating expense reductions. However, it remains to be seen if Oclaro achieves the targeted synergies. We think the merger appears to be a sensible alternative in an already overcrowded component space.

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