1094739--7/1/2010--FINISAR

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{customer, product, revenue}

{product, market, service}

{acquisition, growth, future}

{operation, international, foreign}

{stock, price, share}

{property, intellectual, protect}

{cost, operation, labor}

{tax, income, asset}

{financial, litigation, operation}

{regulation, government, change}

{personnel, key, retain}

{product, liability, claim}

{provision, law, control}

{loss, insurance, financial}

We may lose sales if our suppliers or independent contract manufacturers fail to meet our needs or go out of business. If we are unable to realize anticipated cost savings from the transfer of certain manufacturing operations to our overseas locations and increased use of internally-manufactured components our results of operations could be harmed. Failure to accurately forecast our revenues could result in additional charges for obsolete or excess inventories or non-cancellable purchase commitments. If we encounter sustained yield problems or other delays in the production or delivery of our internally-manufactured components or in the final assembly and test of our transceiver products, we may lose sales and damage our customer relationships. We are dependent on widespread market acceptance of our optical subsystems and components, and our revenues will decline if the markets for these products do not expand as expected. We depend on large purchases from a few significant customers, and any loss, cancellation, reduction or delay in purchases by these customers could harm our business. Because we do not have long-term contracts with our customers, our customers may cease purchasing our products at any time if we fail to meet our customers needs. We may not be able to obtain additional capital in the future, and failure to do so may harm our business. The markets for our products are subject to rapid technological change, and to compete effectively we must continually introduce new products that achieve market acceptance. Continued competition in our markets may lead to an accelerated reduction in our prices, revenues and market share. Decreases in average selling prices of our products may reduce our gross margins. Shifts in our product mix may result in declines in gross margins. Our customers often evaluate our products for long and variable periods, which causes the timing of our revenues and results of operations to be unpredictable. We will lose sales if we are unable to obtain government authorization to export certain of our products, and we would be subject to legal and regulatory consequences if we do not comply with applicable export control laws and regulations. We depend on facilities located outside of the United States to manufacture a substantial portion of our products, which subjects us to additional risks. Our future operating results may be subject to volatility as a result of exposure to foreign exchange risks. Our business and future operating results are subject to a wide range of uncertainties arising out of the continuing threat of terrorist attacks and ongoing military actions in the Middle East. Past and future acquisitions could be difficult to integrate, disrupt our business, dilute stockholder value and harm our operating results. We have made and may continue to make strategic investments which may not be successful, may result in the loss of all or part of our invested capital and may adversely affect our operating results. Our ability to utilize certain net operating loss carryforwards and tax credit carryforwards may be limited under Section 382 of the Internal Revenue Code. Because of competition for technical personnel, we may not be able to recruit or retain necessary personnel. Our failure to protect our intellectual property may significantly harm our business. Claims that we infringe third-party intellectual property rights could result in significant expenses or restrictions on our ability to sell our products. Our products may contain defects that may cause us to incur significant costs, divert our attention from product development efforts and result in a loss of customers. We are subject to pending shareholder derivative legal proceedings. Our business and future operating results may be adversely affected by events outside our control. The conversion of our outstanding convertible subordinated notes would result in substantial dilution to our current stockholders. Delaware law, our charter documents and our stockholder rights plan contain provisions that could discourage or prevent a potential takeover, even if such a transaction would be beneficial to our stockholders. We do not currently intend to pay dividends on Finisar common stock and, consequently, a stockholder s ability to achieve a return on such stockholder s investment will depend on appreciation in the price of the common stock.

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1094739--7/1/2010--FINISAR_CORP