Interesting. I had thought that 40% EPS increase
was the estimate. But then again, it's just
an estimate, and with the Xyplex acquisition,
I am not going to concern myself with the estimates
so much.
Yes, I will call Danny to see if i can get better
answers than he had given me before. He had told
me that they never thought it was an issue because they wanted to cut the turnaround time, but since the investing community
thought it was a problem, they are addressing the
issue.
One thing, though. There obviously is a pricing pressure
for the low-end switches. And when that happens, the big
guys usually win. However, MRV has a good brand name
in the European Markets. And Xyplex, apparently, had
good reputation but mistakenly stopped innovating.
This is not to say however, that MRV will be stuck with
the low-end switch business. With their technology advantage
in fiber optics and CalTech PhDs., I believe this could
be their strongest asset over the Intels and the COMS.
They will continue to carve out new, profitable niches
in the networking arena. It is just extremely hard to value intellectual capital and it never is a good enough foundation to base your stock buying decisions on just that - intellectual capital.
The good thing is, even if you are valuing MRV by P/E or
P/S ratios, it seems like it is trading for a discount.
But then again, a high-tech business continuity of earnings
is unpredictable, and models like DCF, etcetera, just
don't seem to apply as handily as they do, with traditional
boring companies. |
