Exhibit 99.1

www.avanex.com

Avanex Announces Fourth Quarter and Fiscal Year 2007 Financial Results

FREMONT, Calif. – Sept. 4, 2007 – Avanex Corporation (NASDAQ: AVNX), a pioneer of intelligent photonic solutions that enable next-generation optical networks, today reported financial results for its fourth quarter and fiscal year ended June 30, 2007.

Net revenue in the fourth quarter of fiscal year 2007 was $51.1 million compared with net revenue of $45.5 million in the fourth quarter of the previous year and net revenue of $55.1 million in the prior quarter. Fiscal year 2007 net revenue was $212.8 million, a 31 percent increase over net revenue of $162.9 million in the prior fiscal year.

Gross margin in the fourth quarter of fiscal year 2007 was 24 percent, an increase of 20 percentage points over the fourth quarter of the previous year and an increase of 5 percentage points over the prior quarter. Gross margin in fiscal year 2007 was 18 percent, an increase of 13 percentage points over the prior year’s gross margin of 5 percent.

The company reported a net loss of $5.7 million or a net loss of $0.03 per share in the fourth quarter of fiscal year 2007, compared to a net loss of $9.1 million or a net loss of $0.04 per share in the fourth quarter of the prior year and a net loss of $6.7 million or a net loss of $0.03 per share in the prior quarter.

Fiscal year 2007 net loss was $30.6 million, or a net loss of $0.14 per share, a $24.1 million or $0.20 per share improvement from the previous year’s net loss of $54.7 million or a net loss of $0.34 per share.

Non-GAAP net profit in the fourth fiscal quarter of 2007 was $49,000 or $0.00 per share, compared with a non-GAAP net loss of $9.1 million or a non-GAAP net loss of $0.04 per share in the fourth quarter of the prior year and a non-GAAP net loss of $3.0 million or a non-GAAP net loss of $0.01 per share in the prior quarter. Fiscal year 2007 non-GAAP net loss was $13.5 million or a loss of $0.06 per share, compared with the previous year’s non-GAAP net loss of $42.5 million or a loss of $0.26 per share.*

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“We are very pleased with the significant progress we made during fiscal year 2007,” said Jo Major, president, chairman and CEO of Avanex. “We built a solid foundation for our future growth as we grew revenue 31 percent, reduced our net loss by almost half and increased our gross margin by 13 percentage points over the previous year.”

“In the fourth quarter of fiscal year 2007 and for the first time in the company’s history, we generated cash on an operational basis and reached non-GAAP earnings per share break-even. We are encouraged by our new product pipeline and the customer demand we see for the second half of the calendar year. In addition, we are very excited by the addition of the Essex team in the first quarter of fiscal 2008 and the opportunity to increase our product portfolio and presence in the transmission market and continue to reinforce our leadership position in the amplifier, dispersion compensation and wavelength management/ROADM markets.”

Q1 FY 2008 Outlook

The company expects revenue to be between $52 million and $55 million and gross margin to be flat in the first fiscal quarter of 2008, ending Sept. 30, 2007.

Conference Call

Avanex will host a conference call today, Sept. 4, 2007, at 1:30 p.m. Pacific time; 4:30 p.m. Eastern time. Investors are invited to join the conference call by dialing 706-679-8764 and referencing “Avanex”. A live webcast will also be available on the investor relations section of the company’s website at www.avanex.com. An audio replay will be available for one week and can be accessed by dialing 706-645-9291 and entering access ID number 7325551.

About Avanex

Avanex Corporation is a leading global provider of Intelligent Photonic Solutions^(TM) to meet the needs of fiber optic communications networks for greater capacity, longer distance transmissions, improved connectivity, higher speeds and lower costs. These solutions enable or enhance optical wavelength multiplexing, dispersion compensation, switching and routing, transmission, amplification, and include network-managed subsystems. Avanex Corporation was incorporated in 1997 and is headquartered in Fremont, Calif. Avanex Corporation also maintains facilities in Horseheads, N.Y.; Melbourne, Fla.; Shanghai; Villebon Sur Yvette, France; San Donato, Italy; and Bangkok. To learn more about Avanex Corporation, visit our web site at: www.avanex.com.

Forward-looking Statements

This press release contains forward-looking statements including statements regarding expected first quarter of fiscal 2008 outlook and operating results, market demand and growth trends for our products and our strategies. Actual results could differ materially from those projected in or contemplated by the forward-looking statements. Factors that could cause actual results to differ include general economic conditions, the pace of spending in the telecommunications industry and in particular the optical networks industry, market demand and price of our products, the

company’s ability to sufficiently anticipate market needs and develop products and enhancements that achieve market acceptance, problems or delays in reducing the cost structure of the company, problems or delays in realizing the benefits of the divestiture in France, the company’s ability to effect its restructuring goals, unanticipated costs and expenses or the inability to identify expenses which can be eliminated, any slowdown or deferral of orders for products or the application of accounting or tax principles in an unanticipated manner.

Finally, please refer to the risk factors contained in the company’s SEC filings including the company’s Annual Report on Form 10-K filed with the SEC on Sept. 28, 2006, Quarterly Report filed on Form 10-Q on May 3, 2007 and subsequent filings with the SEC.

Avanex assumes no obligation and does not intend to update any forward-looking statements, whether as a result of new information, future events or otherwise.

* Non-GAAP net loss excludes share-based compensation expense, amortization of intangibles, gains (loss) on disposal of property and equipment, and restructuring charges. Fourth quarter fiscal year 2007 non-GAAP net loss also excludes a loss on the sale of a subsidiary and the operating expenses associated with this subsidiary until the closing on April 16, 2007. Fiscal year 2007 non-GAAP net loss also excludes legal, accounting and consulting expenses related to transactions that were not completed. Fiscal year 2006 non-GAAP net loss also excludes an inventory provision related to non-RoHS (Restriction of Hazardous Substances) compliant product, and a loss on debt refinancing.

Details on the items excluded from non-GAAP net profit (loss) and non-GAAP net profit (loss) per share are available in the table entitled, “Reconciliation of GAAP Net Profit (Loss) to Non-GAAP Net Profit (Loss),” following the accompanying financial statements.

Contact Information

Maria Riley

Director of Communications

510-897-4188

maria_riley@avanex.com

Avanex Corporation

CONSOLIDATED BALANCE SHEET

In thousands

(Unaudited)

Avanex Corporation

CONSOLIDATED STATEMENTS OF OPERATIONS—GAAP

In thousands, except for per share data

(Unaudited)

Avanex Corporation

RECONCILIATION OF GAAP NET PROFIT (LOSS) TO NON-GAAP NET PROFIT (LOSS)

In thousands, except for per share data

(Unaudited)