<<Sector, what's your take on MRV's technology? What will make them stand out or at least carve a niche market? >>
Sorry it took me so long to respond. It was a very busy day at work.
First a brief bit of Background. MRVC started out as a optical fiber products company that moved into Networking beginning in 1993, but mainly thru acquisitions in 1995 and 1996. Now networking products are 78% to 22% for the fiber products (pre Xyplex).
MRVC has everything you could ask for in a networking company (except for street recognition of course - which will come). It has excellent, knowledgeable and dedicated management. It has an extremely low cost structure, strong ASIC based high density switch technology, a full switching product line in FE/GE/IP, a strong European base of customers, a low tax structure in Israel (8 years of tax moratorium left), no debt, money in the bank, and now a recently doubled sales staff (and hopefully improved marketing).
MRVC's fiber product and ASIC design base is a HUGE competitive advantage - something that the larger networkers (CSCO, BAY, COMS) don't have but surely wish they did. This is where MRVC beats the competition with the highest density/low cost per port ICs (which INTC also uses in it's new switching products).
Xyplex brings them technology to fill any crevices, several patents, a base of domestic customers, a much improved support capability, an entry into the enterprise RAS/RAC market, more sales outlets, etc. etc.
Niche market? If you want to call it that, it's all the smaller companies in the world with networks, to whom full range, high quality, high performance networking solutions at a low price is important. Since everybody has a network these days, this is a huge market.
Like any 800 pound gorilla CSCO deals with the largest enterprises - many of who buy mainly CSCO products (at typical high CSCO prices). At these larger shops, price is less important than a richness of interfaces, compatibility with their other installed CSCO products, and a high level of support.
Smaller shops, however are typically more price sensitive, and have less complex networks with straight forward connectivity (predominantly Ethernet based) problems. Here MRVC can thrive for many years as we begin to move up the FE/GE installation curve.
Xyplex, IMO gives them a quantum leap forward at an incredibly low price. I think that after Xyplex is consolidated ( Q1 for restructuring charge, and Q2-Q3 for other aspects of integration), MRVC's earnings will begin to leap upward.
In short, I think MRVC is ideally positioned going forward to thrive in competition against the big three.
Lastly, there is always the acquisition wildcard. There are several larger companies that would love to move into data networking in a big way. To name a few they are, LU, NT, CPQ, TLAB, Toyota, ERICY, DELL, and of course INTC. With the addition of Xyplex, MRVC is now a complete company and would have to be extremely attractive to any of them.
And if no one buys them, this is a $100 company within 3-4 years. |
