From Yahoo New Coverage Global capitol
part 1
by: stealthbuyer (M/New York, NY) 8/22/00 11:51 am
Global Capital Markets Equity Research
messages.yahoo.com
messages.yahoo.com
messages.yahoo.com
August 21, 2000
Recommendation: Buy
We are initiating coverage of MRV Communications, Inc. with a buy recommendation. We have established a 6 to 12 month target price of $100.
Investment Rationale
MRV Communications is a leading manufacturer of single mode fiber optic components. MRV provides innovative and Technologically advanced products to the Data Communications, Telecom, Cable TV, PCS/Cellular, and Fiber Optic Test Equipment makers.
The company is focused on bridging the gap between the high speed fiber backbone and the end user.
The company has filed to sell Luminent in an IPO. This is the first in a series of planned IPO's from up to 14 business segments that MRV runs.
The market for fiber optic components will rise to $23 billion by 2003, up from $6.6 billion in 1999, according to research firm Ryan, Hankin,
and Kent.
Company Profile
MRV Communications provides high speed optical networks, integrated
switching, routing, remote access, and fiber optic systems that enhance
performance of existing telecommunications networks.
part 2
by: stealthbuyer (M/New York, NY) 8/22/00 11:52 am
Msg: 41971 of 41973
Recommendation and Valuation
MRV Communications is a leading manufacturer of single mode fiber optic
components. MRV provides innovative, technologically advanced products to the Data Communications, Telecom, Cable TV, PCS/Cellular, and Fiber
Optic Test Equipment marketplaces. The company has a state of the art foundry utilizing both Liquid Phase Epitaxy and Chemical Vapor Deposition. In the 1990's fiber optic technology revolutionized the transport of data, voice, and video signals by producing data rates in
excess of one billion bits per second and high speed transmission distances beyond 100KM. MRV was at the forefront of this technology with a full product line of lasers, ELED's, photodiodes, transmitters, receivers, transceivers, and bi-directional modules. The company
leveraged its early range of fiber optic components into a well focused range of solutions integrating switching, routing, remote access, and optical transmission systems. The Access Network connects residential
customers and corporate networks to Internet Service Providers Points of Presence (POP's). Recently service providers began installing new high speed broadband Digital Subscriber Lines (DSLI's) and cable modems to
provide high speed Internet access over traditional analog lines. New technologies such as Fiber-In-The Loop and Fiber-To-The-Home have
emerged to provide the next generation of the Access Network. MRV's Optical Access and Nbase Xyplex divisions operate in this space. The Optical Transport Network interconnects service providers POP's in the
metropolitan area. POP's deploy mostly voice based equipment that aggregate access traffic and place it onto the optical backbone using the legacy Sonet transmission standard. Such optical equipment aggregates multiple traffic types from the Access Network and interconnects to the backbone of the network. A new generation of database equipment is required to handle increased demand for data
traffic and broadband Internet applications. The company's Fiber Driver from its Nbase Xyplex division and Metrofusion from its affiliate startup, New Access Communications address the Optical Transport space.
The Carrier Backbone Network provides long distance, inter-exchange connections between metropolitan centers. New and existing carriers started deploying new equipment in their backbone in order to meet increased demand for bandwidth. High performance switches and IP routers enable the network to handle increasing volumes of data traffic,
in addition to legacy voice traffic. Dense Wave Division Multiplexing systems enhance the capacity of fiber optic cables. These new technologies have increased the backbone network capacity, requiring a new generation of terabit class routers to ensure future growth and reliability. The company's Charlott Networks designs the Aranea router
for internet backbone applications. MRV has launched the development of new technologies in order to drive next generation infrastructures.
Such developments include Optical Access Systems, subscriber Management Systems, Linux Based Enterprise Switches, and Carrier Class Routes. The company is focused on bridging the gap between the high speed fiber
backbone and the end user. They want to bring higher bandwidth to the edge of the network, to the end user. MRV is working on cohesive solutions to bring high bandwidth at the core of the network right into your home of office.
part 3
by: comp10k 8/22/00 11:52 am
Msg: 41972 of 41973
The company's strategy is to develop and spinout many divisions of the company. The first step in the company's strategy is to spinout their fiber fiber optic components division under the name Luminent, Inc.
Luminent should be the first of five spinout IPO's over the next year. MRV is planning to spinout shares in Luminent to MRV shareholders.
Since MRV is maintaining ownership of 80.1% of the company, this should prove to be a large distribution of shares. The number of MRV shares you own will determine how many shares of Luminent you receive at the time of the distribution. Luminent is one of the leading active and
passive optical component suppliers for the Access and Metro markets, which should command a lofty valuation. These are the scarcest, most valuable components of the Internet. Furthermore, the new CEO of Luminent, William Spirey, Phd, comes to the company from Lucent, leaving
his position as President of Lucent's Network Products Group. Luminent is projected to have revenues of approximately $120 million in 2000 and approximately $200 million in 2001. The company's net loss for the six
months ended 6/30/00 was $33,614,000. Revenue for this six month period was $139,007,000. The company's customers include: Cisco, Marconi, Alcatel, JDS Uniphase, Extreme Networks, Foundry Networks, Cabletron, IBM, Worldcom, Motorola, Nortel Networks, Tellabs, 3M, General Motors,
Sprint, British Telecom and AT&T. The company also recently closed the acquisition of Astro Terra Corp., a pioneer in the development of optical wireless technology. Astro Terra's new TerrLink Fusion Systems
combine an optical communication link with an automatic radio frequency back-up to provide 100% wireless availability, even in the worst weather
conditions. The company has already announced plans to file for an IPO of Optical access within 90 days. Optical wireless last mile connectivity may be the last technology that breaks open the bandwidth bottleneck as it quickly and cheaply extends the penetration of protons
directly to the end user. Optical Access uses lasers that use less power than a barcode scanner to transmit infrared laser signals straight into your home or office. The company may eventually spin-off other divisions such as iTouch, Charlotte's Networks, Zaffire, and Zuma
Networks. MRV is in the hottest area of the marktet rolling out a turn-key solution for service providers that need to get their system deployed in a hurry. We recommend purchase as we believe a series of spin-offs will provide significant value to shareholders |
