The future of Optical Communications Products, Inc. may be decided in court following a legal challenge to the company’s shareholder rights plan that was designed to delay a potential buyout. Oplink Communications, Inc. based in Fremont filed a lawsuit to invalidate portions of the plan, filed by a special committee of the OCP board of directors two weeks after it reached a deal to buy a majority share of OCP stock from The Furukawa Electric Co., Ltd. Oplink then tendered an offer of $1.50 per share for the remaining stock of the Woodland Hills fiber optics components maker to complete the purchase of the company. The plan allows for shareholders of record as of May 14 to purchase shares of preferred stock in the event of the closing of the deal between Oplink and Furukawa; a third party acquires more than 15 percent of outstanding shares; or purchase of additional shares by Oplink or Furukawa. In a letter to shareholders, Hobart Birmingham, chairman of OCP’s special committee, wrote that the plan was authorized to delay the majority share purchase by Oplink and to determine if it was in the best interests of the shareholders. Frederic Boyer, OCP’s senior vice president and CFO, declined to comment further on the matter. In its legal challenge filed in Delaware Court of Chancery, Oplink seeks to invalidate the shareholder rights plan, because it attempts to prevent the sale of Furukawa shares to Oplink, and to prevent the special committee from implement the plan. The rights granted in the plan expire June 2. That Oplink’s planned purchase of the OCP stock has landed in court must have come as a surprise to its president and CEO Joe Liu and CFO Bruce Horn who seemed optimistic of combining the companies during a conference call with analysts on April 23. “The first priority here is to work with the OCP board in trying to acquire the remaining shares and we can go into specifics about integration at another time,” Horn said during the call. Acquiring OCP would give Oplink an expanded product offering and customer base and would overall make the company more competitive, Liu said. Horn also declined to say whether Oplink would increase the $1.50 per share offer to get the deal completed. Once a hot player in the telecomm industry and a survivor of the industry’s downturn, OCP has struggled recently, especially with their late start getting to market with products for 10 gigabit Ethernet, the fastest connection available for the Internet and a fast growing sector of the tech industry. OCP will make available 10 gigabit products during fiscal 2007. The company also faced the departures last year of its three founders although one, Tran Van Muoi, remains chairman of the board and an announcement it would be moving its manufacturing out of Woodland Hills to China. Having manufacturing in China is a plus for the company because of the capacity for high volume production and close proximity to customers and their supply chains. Oplink has worked with the management of OCP for more than two years and has a great respect for them, Liu said. Customer response to OCP’s products has been good as those products are of high quality and the company provides good support, Liu said. “That is the reason why we made the effort [to purchase OCP],” Liu said. “Our belief is the team they have had has a good track record. The combination of the two companies can be a strong one.” OCP reported a net loss for the first quarter of its 2007 fiscal year. The company tallied a loss of $4.2 million, or an earnings loss of $0.04 per diluted share, on revenues of $17 million for the quarter ending Dec. 31. For the same period in 2005, the company had a net income of $1 million, or $0.01 per diluted share, on revenues of $17.8 million. For the third quarter ending March 31, Oplink reported a net income of $4.3 million, or $0.19 per diluted share, on revenues of $27.6 million. That is a 330 percent increase from the net profit of just more than $1 million, or $0.05 per diluted share, on revenues of $14.6 million for the same period in 2006.