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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: SpecialK who wrote (7217)2/24/1998 8:07:00 PM
From: Eric L.  Read Replies (1) of 42804
 
As I recall the CC & the follow-up by an anyalyst, it was stated that the expected "healthy"sequential earnings would almost entirely be due to growth in core business & that the contribution by Xyplex would be immaterial or inconsequential toward next Q's earnings. Xyplex's contribution (even though it does 40 mil. revenueyearly & potentially 10 mil. a Q) is minimal because they officially took over well in to Q1. Additionally they see the benefits of Xyplex primiarily being longer term as their products complement NBase's & see revenue growth in the new product they refered to.

I was going to wait until the end of the thread to comment on INTC & the CC, but I'd like to jump in here since I'm less than halfway & the questions keeps being asked. I am still long this stock.

From the CC we know that:

1) No single customer exceeds 10% of sales.
2) Nbase is MRVC's biggest customer.
4) The OEM arrangements that MRVC has were mostly sought out by the other party & not MRVC (I took this (perhaps incorrectly) to refer to NN, DEC & INTC).
5) DEC & NN business now gone permanetly.
6) MRVC has no plans to aggresively persue OEM agreements. They appreciate the extra business,but will be concetrating on direct sales & developing NBase brand.
7) Over the immediate short term MRVC is laying the base for future growth & will be affected somewhat in the near term by that (eg. intergrating Xyplex).The co. sees the future as moving into the big leagues & overtaking at very least CS & probably one of the other big three.
8) By concetrating on direct that means challenging CSCO specifically & others -- INTC for eg.
9) The fiber capability of MRVC is a significant competitive advantage in its challenge to the big three.

Due to the above, the CC & other news, I think the following:

1) INTC's OEM relationship w/ MRVC is now & will continue to be somehwat minimal. Perhaps an agreement for 1-2 products but not an entire line & only a stop gap until INTC can gear up itself or aquire the capability.

2) INTC is pushing to accelerate connectivvity & networking so that the PC arena will more quickly be staturated w/ speed & hence will need INTC's next generation, premium processors. The sooner the better to offset the emergence of the low margin sub$1000 market. INTC will help acceleration by providing aboundant low cost fast networking capability -- maybe to the extent of raping the networking side (selling at least very low or possibly even negative margin) if it positively drives the chip side

3) At least one analyst seemed to be fishing to see if INTC's relationship was significant -- perhaps if it is not, he rightly sees them as a significant competitor.

4) There was general concern about the inventory "problem.'

a)I guess all anyalyst ignore the co. talk at the beginning & reead the #s & ask their Q's even if they had already been answered during the initial co. talk.
b)The co. did not successfully assuage the general fear about the inventory only because of weak communication skills. In general, they are not good at reading the anylasts Qs & firmly answering them. I think they did but not too smoothly & not with enough emphasis.

I have some more thoughts which maybe I'll get to later, but dinner calls!!!

later,
eric
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