MRV Communications (MRVC) opinions? Message Board

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Technology Stocks : MRV Communications (MRVC) opinions?

MRVC 9.975

-0.1%

Aug 15 5:00 PM EST

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To: Dan Spillane who wrote (3186)	4/30/1997 4:21:00 AM
From: mike wheaton	of 42804

INFRASTRUCTURE NEWS: Segments from INFRASTRUCTURE articles relating to MRVC which validate observations made by Dan and others. ... Networking shares came under pressure over the last week on news that Intel (INTC) will cut hub pricing and more importantly, has developed a single-chip Ethernet device. Early in the week, the selling was indiscriminate. Neither Cisco Systems (CSCO) nor MRV Communications (MRVC) participate in the hub market yet each companies' shares were hit. The retreat in MRV was particularly odd given the fact that the company has a relationship with Intel and will benefit from expanding sales volumes. The Intel Ethernet device exemplifies the pricing pressures that will come to the industry. Although profit margins at many companies lacking a high-end and/or niche market focus will come under pressure as the silicon giant moves more aggressively, widespread fears -- especially among those that follow 3Com (COMS) -- of a total incorporation of Ethernet on a PC motherboard are a bit exaggerated; it will likely occur on a small scale but it is not as analogous as adding a PCI bus as Intel contends. Motherboard circuitry will grow more complex at a time when the industry has demonstrated some resistance to this trend and when we finally do see mass-market product, competitors will be in a better position to address the threat. Among vendors, 3Com is the most vulnerable to Intel's salvos and aside from the network adapter card issue we have discussed in numerous writings, 3Com controls about 25 percent of the intelligent hub market. ..... MRV Communications (MRVC) ========================= MRV Communications has been volatile in the last month but we remain very confident in the strength of their business, partnerships and technology. Numerous start-ups in the Gigabit Ethernet market are making their way to market with product and 3Com plans to be aggressive in the market early as compared to other large network vendors. But MRV Communications will continue to capitalize on strong demand for its LAN switches and will make inroads in the nascent Gigabit Ethernet market. We expect the pending first quarter financials release will also show strong opto-electronic sales as well. The stock trades at about $21 and is a buy. Selected Financial Ratios: Price to Book: 14.8 Price to Sales: 5.87 P/E Ratio: 55.8 Price to Cash Flow: 54.1 Return on Equity: 34.6% Mike Dan, Thanks for your estimates of what the current market action seems to be expecting ( .15 )

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