Here is the synopsis of the BEST report. It's not much, no mention of OA subsidiary, possible IPO, new REDX product competing with Redback, the fact we have BETAs lined up for all products, that we will have 300,000 homes enabled with their FTTC technology by the end of the year, or anything about China - to mention a few items they could have included.
MRV Communications* (MRVC 14.38) - Attractive
Returning to Profitability
Earnings Estimates P/E
Q1 Sep Q2 Dec Q3 Mar Q4 Jun Year Year
1998 $0.27 $0.30 $0.05 ($0.25) $0.37 38.9x
1999 ($0.03) $0.02 $0.02 $0.02 $0.03 479.3x
2000 $0.03E $0.05E $0.08E $0.14E $0.31E 46.4x
BEST says that MRV returned to profitability in Q2 reporting EPS of $0.02, right in line with their estimate, beating their revenue forecast by $1 million due to better performance in the optical components business.
They give the geographic breakdown of 57% international, 43% domestic, and state Networking breakdown was 78.5%, lightwave components 21.5%.
The Lightwave fiber optic components were an "uptick from last quarter" and are expected to continue to increase in the future.
BEST says that new products will increasingly drive the business. They mention three new startups, with a fourth to be announced later this year.
"The new startups and their products include New Access - Dense Wavelength Divisional Multiplexers (DWDM); Nbase-Xyplex - gigabit routing switch; and Charlotte's Web - terabit switch routers."
They offer this pearl of wisdom:
"Traffic for voice and data networks is increasing. Today bandwidth and the short distance that data can travel limit network providers. The new products offered by MRV will potentially provide faster, less costly voice and data transmission. The demand for such products will drive business going forward."
BEST says that the Balance Sheet improved in Q2 with DSO decreased to 71 days in Q2 from 74 days in Q1 and "Payable days" decreased to 64 from 70 in Q1, and that cash increased to $26 million from $22 million in Q1.
BEST adds that management indicated that it will increase spending in R&D, and Sales & Marketing on its start-ups. They endorse the revenue growth strategy, "as it appears that new products of the start-ups can significantly increase the market value of the company".
BEST RAISES their 2000 revenue forecast to $330 MM from $320 MM, and their 2000 EPS estimate to $0.31 from $0.30, but they lowered their 1999 EPS estimate from $0.05 to $0.03 "to reflect higher spending this year".
They maintain their "Attractive" rating. |
