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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: Mr. Pink who wrote (10107)8/19/1998 8:47:00 PM
From: David Semoreson  Read Replies (1) of 42804
 
In effect they have taken their profit and "lost" it buying & restructuring broken businesses in order to grow more quickly. They have written it off rather than capitalized it as goodwill.... I think that glass is half full as they are building a serious company for the future.

There is a big difference between structuring a deal to minimize taxes and defrauding investors. You have suggested the latter which I find highly unlikely given the kind of people running the company.

If they capitalized instead of wrote off, the difference going forward would be earnings (and taxes) reduced by the amortization charge. Even if that were the case, these guys are growing quickly and trading cheaply as a PE multiple. This is not like some of these companies growing at 20% and trading at 30-40 PE multiples.

In any case, why don't you tell me the worst case scenario for the amount the SEC would make them capitalize. Then we can refigure taxes and earnings for the past, and going forward.

Lastly, you seem to indicate that any company that is profitable but doesn't generate cash is a short. Is that correct or is there more to the magical formula? Insider info from the SEC perhaps? Or those spies that saw the sales staff fleeing?

Keep up the conversation ... lets get detailed.

** David
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