MRV Communications (MRVC) opinions? Message Board

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Technology Stocks : MRV Communications (MRVC) opinions?

MRVC 9.975

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Aug 15 5:00 PM EST

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To: rascalbythesea who wrote (12673)	4/11/1999 4:21:00 PM
From: George Dawson	Read Replies (1) of 42804

bennythebug and Sector: A few observations: 1. With regard to the convertible debentures. I made a few posts here after doing some research on the subject. My main concern was whether the convertibles could behave like convertible preferred stock, specifically floorless convertible preferreds or stock where the conversion is set by a formula that results in a conversion price below the current market value. My research turned up nothing to suggest that they could. In other words, I don't think they can be sold short for profit - basically because you would never be able to recoup your purchase price with this mechanism. I posted a note on the "Floorless Convertible Preferred" thread and got this response: Message 6574285 My search for contradictory opinions has been fruitless. 2. There are comparisons to Cisco and others here and those are not the peer groups that I see in the financial literature. The comparisons are more like EMLX, ACT, FVCX, ZRAN, etc. or companies with market caps of 126M -> 232M. From a competitive standpoint - the key question is what can be done to improve their margins and the ratio of high margin/low margin sales. I don't think that there should be a wait for WDM gear. The GE market is described as taking off (finally). Extreme Networks(EXTR) stock skyrocketed on Friday (from $17 -> $55.375). An inspection of their product line shows that there is a degree of overalap with MRVC products: extremenetworks.com What is MRVC doing to sell this line of equipment and provide the product features their customers want? 3. Institutional ownership is low relative to the semiconductor and S & P Index (26.3% vs. 57% and 62.4% respectively). 4. Analysts and consensus ratings on most of the reports I see are still rating the company as a Buy or Buy/Hold. The consensus of the 2 to 4 analysts who follow the company changed in Sept/Oct 1998 when they became less bullish. 5. In my opinion the current decline in share price is a result of the decreased margins and R&D and restructuring costs. If that is the case this is reflected in the short position which basically is people betting against the company or hedging a position. There is no mechanism I know of that would result in pure short selling that would keep the price down. I think that there may have been some advanced warning of cash flow concerns in the degree of insider selling which was steady in 1996 and 1997 at prices ranging from $18 to 47.25. A total of 688K shares were sold at that time. If I recall the discussion on this thread it seems that people thought these sales were reasonable reward for management at the time. George D.

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