When you click on the "Presentation" off of the MRV web site, you now get an introduction screen, which includes the full text of Noam's Q4 Conference Call. I thought this might be a good time to post this.
Also, check out all the good info here, SEC filings, press releases, Earnings dates for the next two quarters FAQs, last 2 Annual reports in PDF format, Investor Highlights (hey John this is for you), Research ANALysts, etc - all easy to find (they ARE improving):
mrv.com
Recent comments made by Noam Lotan, President & CEO, in a conference call with securities analysts:
Thank you for joining us this afternoon.
MRV Communications is a leading provider of Optical Network Components and Systems.
In our previous conference call, last quarter, we reported that; Delays in new product introduction resulted in a missed product cycle, and significant margin pressure. This hotly contested segment of the 10/100 workgroup switching area has become a commodity driven market, where there's little room for differentiation between vendors. Price per port and brand recognition count the most.
I am pleased to report to you that during the fourth quarter, three new products in the 10/100 switching area were completed and introduced as planned just prior to year-end. The new products are: a 10Mb desktop switch, a new 10/100-Mb workgroup switch with a Gigabit up-link, and a new Gigabit Ethernet switch.
While these products offer a better price point and higher functionality, margin pressure still remains.
We also reported weaker than expected demand for data networking products in Q3. Fortunately, demand during the fourth quarter improved considerably, and spending on networking equipment, delayed during the summer, resumed in Q4.
Let us now take a look at new products which will allow MRV to further differentiate itself from other vendors, and gradually help restore gross margins to our historic levels.
The Fiber Driver line, introduced at the beginning of the quarter has met our expectations by contributing close to $2 million to revenues. Fiber Driver provides customers with a managed optical infrastructure and is an essential "enabler", when deploying a new network, or "enhancer" for an existing one. The product line features 3 different size chassis and a variety of more than 50 plug-in modules. The modules provide media conversion, distance enhancement, switching, fiber savings and redundant links for a fiber optic cable plant. We support most data network physical layer standards, including Ethernet, Fast Ethernet, Gigabit Ethernet, ATM, SONET, and more. Several new modules are in design, with new applications emerging almost daily.
The latest addition to Fiber Driver is the Wireless Fiber Driver. The product was demonstrated at the ComNet show in Washington DC, carrying one Gigabit of LAN traffic through the air. We will start shipping the Wireless Fiber Driver around the June-July time frame. The Wireless Fiber Driver is an industry leader in delivering a very high data rate in free space transmission, with the potential to drive multi-Gigabit traffic, such as SONET, IP over SONET, Cable TV and cellular telephony in wireless local loop. Think of it as a virtual fiber connecting two points at a line of sight. CLEC/ISP customers will be able to deploy it at a fraction of the cost of laying new fiber in Metropolitan areas.
At ComNet, we were very pleased to receive the Best-of-Show award in the Wireless Communication category for the Wireless Fiber Driver.
Another promising product launched at the ComNet show is the Accelerouter. The accelerouter is a router acceleration device that greatly improves throughput in existing routers, including most of Cisco's routers, up to a factor of 10 to 20 times. Connected between the router and the LAN, the accelerouter learns automatically the network topology, security and access privileges and performs all routing functionality at full wire speed. For example, most existing software routers (which amounts to an installed base of more than 500,000 routers), are able to route at speed of 100,000 to 250,000 pps. Adding an accelerouter to the network increases routing speed to several millions of packets per second, with full adherence to network security. "Plug and play" installation, one port at the time, makes it possible to accelerate routing performance to Gigabit levels without disrupting user, without complex reconfiguration of IP addresses, and at a substantially lower cost than installing next generation Gigabit Switch/Routers. Achieving hardware-based router performance, at a fraction of the cost, without disrupting the users,is a significant contribution to existing networks.
We intend to ship a modest quantity of the product in the current quarter. Initial customer reactions were positive, even enthusiastic, and the large installed base of routers signal a promising introduction. However, market acceptance is not assured and competitive reaction is unclear.
Another Best of Show Award at ComNet was bestowed on our equity investment: New Access Communications, which was a finalist in the Carrier/WAN category and won the overall Best Product Achievement Award. According to IDG Expo which produces ComNet: "New Access' MetroFusion WDM System was recognized as the Most Innovative New Product in ComNet's New Product Achievement Awards competition, besting other established networking communications companies for the distinction."
In a live demonstration at the show, New Access Communications was first to combine a commercially viable DWDM system with data switching, to transmit multiple Gigabit Traffic in a metropolitan ring. MRV invested an undisclosed amount in New Access, which was expensed as R&D.
During the 4th quarter, we completed the integration of the NBase and Xyplex field organizations into a monolithic Nbase-Xyplex global Sales, Marketing and Support group. The combined organization consolidates products from all our data networking operations and provides our customers with a unified and credible marketing approach and a very clear focus. The focus being: Bright Ideas for Enhancing Network Performance and Accelerating Network Deployment.
Our Global Support Operation provides world class, ISO 9001 certified, technical services, which include call management, technical support, training and sustaining engineering. A new large scale new product validation lab is currently under construction at our Littleton (MA) facility. This new laboratory, (labeled PISTOL, for Product Integration Staging Test Operability Lab), simulates real-life, multi-vendor, multi-user network environment. It validates new products before their general release, and stages complex networks prior to their deployment on site.
One of the most exciting stories at MRV is our lightwave transmission components. During the fourth quarter, revenues from our components business increased by over 20% sequentially. Our backlog continues to indicate strong demand for components, but due to seasonality, we do not expect a similar increase in Q1. We have increased penetration of existing customers as well as developed several new ones. Our challenge now is execution. To this effect, we are investing in a new foundry with up-to-date wafer processing capability, and we are tooling up for a larger manufacturing infrastructure. The next generation product line will require the next level of capacity. An attractive business opportunity for MRV could result from our ability to put together system level optical networking products. A good example is the Fiber Driver, which combines passive components, active components and software to provide a smart physical layer structure.
The ultimate success of MRV will depend on our ability to transmit, manage and route light moving through a fiber-optic network.
During the 4th quarter, MRV Communications was recognized in Deloitte & Touche's Fast 500 Expansion list as #146. The company was the best performer in Southern California in terms of percent increase in revenues. MRV Communications was one of a few winners that appear on the Fast 500 list for three consecutive years.
We are very excited about our technology and our next generation products which are proceeding on track. We continue to invest in technology and infrastructure with confidence in our future. We believe 1999 will show a return to higher profit margins and restore value to shareholders.
As networks are stressed by mounting traffic volumes, optical transmission is the only viable technology to deliver the goods. MRV intends to charge ahead with its vertical integration capability and its new product arsenal. |
