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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: rpsev who wrote (4124)7/9/1997 1:35:00 AM
From: Sector Investor   of 42804
 
To all:

I called MRVC last week and asked for a copy of the Penn Merchant
report, which they promptly sent. A Superb and highly detailed document.
Some points which I have not seen discussed on this thread:

Page 9.

"MRVC relies on Chip Express for its Application Specific Integrated
Circuits (ASICs). Chip Express is a small, dynamic foundry with
whom MRVC has had a strong relationship over the last two years.
Chip Express has been critical in allowing MRVC to be first to market
with its designs, as it can turn around small quantities in ten days to
two weeks as compared to a month or more for most foundries. This
rapid turnaround is essential to the design and testing phase of ASIC
development and MRVC tests new designs about every 60 to 90 days.

Management at Chip Express stated it has adequate capacity to accommodate
MRVC's orders for at least the next six months. The two parties have a
non-exclusive agreement and MRVC indicates it has begun speaking with
larger capacity foundries that could accommodate higher levels of
demand anticipated later in 1997 or overcome any unforseen obstacles
with it's primary fab. As an aside, Chip Express' management also
indicates that they have seen dramatic increases recently in MRVC's
volumes ..."

MRVC indicated some of the money from the secondary might go for
acquisitions - seems to me this foundry should be acquired by MRVC.
Comments?

Also from page 9:

"MRVC's ASIC life cycle is estimated at 12-18 months, with the present
design about halfway through this cycle. MRVC is working on new
generation ASICs for dense (higher port count) switching products
that can offer expanded functionality and faster backplane speeds;
these ASICs should become available during the second half of 1997
and into 1998."

Just when first generation products from BAY, COMS and CICSO
are hitting the market, MRVC will one-up them. sounds good to me!

From page 12:

MRVC's taxes have some slight variability but we project taxes to
finish 1997 at 31%, nominally the same as 1996. MRVC's Israeli
operations are on a 10 year tax holiday (with nine years remaining)
and therefore MRVC's effective tax rate depends on how much
production can be realistically shifted to this region. The amount
of production that has been, or can be shifted to Israel has not
been disclosed, and management indicates that certain strategic
factors govern their allocation decision."

This seems to be another significant advantage MRVC has over
the other networkers. I know COMS tax rate was 36% last qtr for
example, and other domestic companies should be close.

How about some discussion of these points and their significance
for MRVC?
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