<<1). What are the reasons of its recent drop since October ? Correction ?
Warnings from peer group (COMS, BAY, etc) ? Impact of more shares issued ?
Or if there is something more fundamentally alarming ?>>
Cymeed, I just checked in from a busy weekend and see your post here.
I see a couple of people have answered you, but I will as well.
IMO the recent drop comes from three main factors
1) A general PERCEPTION of a networking slowdown. I say perception because
the market has trouble in distinguishing one networker from another. CSCO's
growth slowed this year, ASND tanked primarily to 56K modem problems and
software problems with their leading product (now resolved), followed by a
lack of confidence in mgt and their projections. COMS was also hurt by 56K,
competition from all sides, overpaying for USRX, etc.
2) The Asia thing. Everyone is uncertain as to who will be affected and
by how much. Not knowing these answers, most techs have been taken down.
COMS for one will be hit severely, IMO as their consumer modem sales are tied
to PC sales, which may drop drastically in Asia for a period of time.
Networking Companies like MRVC and ASND and CSCO don't sell to consumers.
But even they sell to different customers. ASND's customers are primarily
ISPs and Telcos, with a growing enterprise presence. CSCO sells mainly
to enterprises and is the king in routers, and is trying to break into
Telco/ISP, but their WAN products are still midrange density at best,
so ASND still has and will continue to have the upper hand there.
MRVC sells FE (fast Ethernet) and GE (Gigabit Ethernet) and IP switch
products to enterprises and has one of the broadest product lines, and
because their costs are about the lowest and their ASIC density among
the highest, they are positioned at the low end pricing point where
they can continue to do excellently. They will do even better when
they add more interfaces and supported protocols to their products,
as they are now doing. MRVC has a 6 month to 1 year lead over the majors
at present. CSCO has had trouble getting their GE products out the door
(now mid 1998) and they will have a much higher price point. MRVC will
do excellently for the next several years here, IMO. I have neglected
to mention MRVC's fiber optic products here, which also have a bright
future.
3) The third reason MRVC is down, IMO is that they ONLY exceeded Q3 by
a penny. The market had higher expectations, and even though earnings
were strong (30th consecutive growth quarter), it was not enough for
the street. MRVC's Q3 is usually about their weakest quarter, so I
think they still did well.
<<2). Their sequential growth rate on a quarter to quarter basis seems
slowing down, is this a factor in the share price ? What kind of revenue
growth are we expecting in Q4 97 and year 98 ?
I for one think that they can return to close to their old growth
levels iin 1998. They have a strong product line, high in density and
low in price, with broadening interfaces. They are using the money
they received to double their sales staff and focus more domestically.
I think this will pay off handsomely in 1998. I will continue with
your other points in a later post. Have to go.
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