December 13th Baron's...
"Q: Where else are you seeing similar value plays?
Schwartz: One is MRV Communications, which we've held for only a month or so now. MRV makes networking equipment, and it also built a large and profitable optical-components business. We view MRV as almost an event-per-quarter stock. By that I mean there are a lot of things going on in terms of IPOs and spinoffs. If you speak to the company, they will tell you they have hired a top-tier banker to explore alternatives for optical access. We think the optical access business is going to go public or at least file their
registration statement some time in the first quarter. And we think they are going to bring in a high-profile CEO. The business makes money, it has a good revenue base, and we think it has a lot of potential.
There are other businesses where a lot of interesting stuff is happening, too. After the optical business we think the next business to go public will be a company called Hyperchannel, which they control, an online fulfillment center for networking products. It is growing very, very rapidly. We think that business could be poised to go public, maybe even file in the first half of next year. Then there's a substantial minority interest in a company called New Access, which is doing next-generation multiplexing technology, the kind of stuff that Sycamore does. Kleiner Perkins and Juniper Networks have both invested in it in the second round of financing. Obviously, to attract that kind of attention, the product has to be real. If you do a sum-of-the-parts analysis you can get anywhere from the 60s-70s to ridiculous numbers on the stock [which was recently at 35]."
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