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Technology Stocks : MRV Communications (MRVC) opinions? -- Ignore unavailable to you. Want to Upgrade?

To: signist who wrote (18031)	1/10/2000 5:04:00 AM
From: signist	Read Replies (2) \| Respond to of 42804

*** Dec.1999 News Revisted *** Dan Schwartz, a money manager with York Capital Management in New York, said in Barron's that he bought the stock about a month ago on the possibility that the company would begin to spin off shares of various divisions with high growth prospects--such as its optical-access business. But earnings are basically irrelevant for most hot telecom and technology stocks these days. Investors are much more interested in the possibility of companies boosting their market values by spinning off divisions for which other investors will shell out top dollar in the initial public offering game. ** By TOM PETRUNO, Times Wire Services MRV Surges on Spinoff Expectations The mania for anything telecom swept up Chatsworth-based MRV Communications on Monday, sending its shares soaring $12.69, or 30%, to a record $55.13. The company (ticker symbol: MRVC), which makes high-speed optical network parts and systems, got a favorable mention in Barron's magazine, published over the weekend. Dan Schwartz, a money manager with York Capital Management in New York, said in Barron's that he bought the stock about a month ago on the possibility that the company would begin to spin off shares of various divisions with high growth prospects--such as its optical-access business. MRV's total sales for the nine months ended Sept. 30 rose 13% to $214.6 million, but the company earned just $183,000 on those sales, in part because of soaring research and development costs. The Wall Street analysts who follow MRV expect it to earn in the neighborhood of 25 to 31 cents a share next year, versus just 2 cents a share in 1999. But earnings are basically irrelevant for most hot telecom and technology stocks these days. Investors are much more interested in the possibility of companies boosting their market values by spinning off divisions for which other investors will shell out top dollar in the initial public offering game. Schwartz estimated the value of MRV's pieces puts a total value on the stock of $60 to $70 at a minimum. MRV has been a hot stock before: It soared from $10 to near $40 in 1996 before falling back to the $20 range. It jumped again late in 1997. In August 1998, however, the stock collapsed after the company warned that product delays as well as weaker European sales would hurt near-term sales and earnings. The shares fell as low as $5 by October 1998. As recently as six weeks ago the stock was selling around $20 a share. Search the archives of the Los Angeles Times for similar stories about: Mrv Communications Inc, Securities, Telecommunications. You will not be charged to look for stories, only to retrieve one. 160.79.35.203 160.79.35.203 Q: Where else are you seeing similar value plays? Schwartz: One is MRV Communications, which we've held for only a month or so now. MRV makes networking equipment, and it also built a large and profitable optical-components business. We view MRV as almost an event-per-quarter stock. By that I mean there are a lot of things going on in terms of IPOs and spinoffs. If you speak to the company, they will tell you they have hired a top-tier banker to explore alternatives for optical access. We think the optical access business is going to go public or at least file their registration statement some time in the first quarter. And we think they are going to bring in a high-profile CEO. The business makes money, it has a good revenue base, and we think it has a lot of potential. There are other businesses where a lot of interesting stuff is happening, too. After the optical business we think the next business to go public will be a company called Hyperchannel, which they control, an online fulfillment center for networking products. It is growing very, very rapidly. We think that business could be poised to go public, maybe even file in the first half of next year. Then there's a substantial minority interest in a company called New Access, which is doing next-generation multiplexing technology, the kind of stuff that Sycamore does. Kleiner Perkins and Juniper Networks have both invested in it in the second round of financing. Obviously, to attract that kind of attention, the product has to be real. If you do a sum-of-the-parts analysis you can get anywhere from the 60s-70s to ridiculous numbers on the stock [which was recently at 35].