Oclaro, Inc. (OCLR) recently announced that it acquired Xtellus, Inc. Under the terms of the acquisition agreement, stockholders of Xtellus will receive Oclaro shares worth $33 million. The agreement also provides for a value guarantee under which stockholders could receive additional consideration if share price of Oclaro fails to achieve a certain price level at the end of calendar year 2010 and Xtellus business achieves certain internal revenue targets.

Headquartered in Denville, NJ, with manufacturing and development facilities in Israel and South Korea, Xtellus is a leading supplier of Reconfigurable Optical Add/Drop Multiplexer (ROADM) technology and dynamic optical modules for Agile Optical Networking Systems. With this acquisition, Oclaro will have a complete family of wavelength selective switches (WSS) capable of powering ROADM applications over the entire optical network, from the edge to the core. WSS is one of the fastest growing segments of the optical component market and management expects the acquisition of Xtellus will play a significant role for growth in future. The acquisition also completes the overall portfolio of product areas required to support Oclaro’s strategic positioning throughout the metro and long haul areas of the telecommunication market.

Management also updated guidance for the second quarter. The company now expects revenues between $91 million and $93 million, up from previous guidance of revenues between $87 million and $92 million in the second quarter of fiscal 2010.

Management had earlier 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.

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.

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