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

To: Sector Investor who wrote (27333)	11/6/2000 6:58:22 PM
From: early player	Respond to of 42804

November 6, 2000 (don't know if this was posted) StockHouse News Desk By Matt Ragas (matt@ragasreport.com) StockHouse Columnist Eye on the IPO: Will Luminent IPO Grab the Limelight? The fact remains that the fiber-optic components market is still expected to grow to over $23 billion by 2003. Orlando, FL, November 6 /SHfn/ -- What a difference a week makes. While skeptics could argue that the NASDAQ rally this week is simply the calm before a storm, the IPO market will use any shred of confidence that it can find. Market stability is always a good thing. While there are only four public offerings on tap for next week according to IPOCentral.com, for the first time in a long while, I sense that institutional investors may actually be ready again to seriously dip their toes back into the IPO waters. In fact, the expected IPO of mobile Internet chip company Transmeta [TMTA proposed] next week could serve as a much-needed catalyst for the entire initial public offering business. Another intriguing deal slated for next week is the expected public offering of Luminent [LMNE proposed], a fiber-optic components company. The Chatsworth, California-based firm is actually a spin-off from network infrastructure company MRV Communications [MRVC]. Luminent had been a wholly owned subsidiary of MRV until April of this year. The $168 million offering is being led by CS First Boston with assistance from Robertson Stephens, Piper Jaffray and First Security Van Kasper. If Luminent prices at the middle of its $13 to $15 price range, the company could hit the public markets with an initial valuation of almost $2.2 billion. Of course, while the bloom has recently come off the fiber-optic rose to some extent, if any deal is going to blossom in the current IPO environment, it is more than likely going to be in the optical networking space. Even with capital spending showing signs of slowing next year for some of the major telecom companies, the fact remains that the fiber-optic components market is still expected to grow to over $23 billion by 2003. Execution--and not fending off the competition--is the biggest challenge that all of these optical networking companies currently face. Luminent specifically designs fiber-optic components such as transmitters, receivers, isolators and couplers that are used in optical networking gear by major telecom equipment companies. Current clients include networking heavyweights such as Cisco [CSCO], General Instrument, Marconi Communications [MONI] and Pandacom. Through relationships with distributors, Luminent also sells to established optical players like Foundry Networks [FDRY], Extreme Networks [EXTR] and Cabletron [CS]. It should be noted that Luminent's parent company, MRV, would initially hold over a 90% stake in the company post-IPO. However, MRV expects to distribute all of its shares of Luminent to current MRV shareholders within six months of the IPO. So this means that for at least the time being, MRV will really be calling all of the shots over at Luminent. This is not necessarily a bad thing, but just something prospective investors should keep in mind. On the competitive front, Luminent goes head to head in various segments of the optical components sector against entrenched players like JDS Uniphase [JDSU], Corning [GLW], Fujitsu [FJTSY], IBM [IBM] and Agilent Technologies [A]. However, as I pointed out last week in this column, the optical networking space is growing so rapidly right now that I believe that execution--and not fending off the competition--is the biggest challenge that all of these optical networking companies currently face. This is another good example of a deal where investors don't have to worry about a company never reaching profitability. Luminent is already safely there. So far, at least on the financial side of the table, Luminent seems to be doing a fairly good job of executing. Sales shot up almost 70% last year to $65 million with net income of over $4 million. In addition, the company reported sales of over $43 million for just the first six months of this year. While this growth isn't as explosive as that of some optical networking companies, this is another good example of a deal where investors don't have to worry about a company never reaching profitability. Luminent is already safely there. Overall, then, I remain optimistic about the prospects for this offering. The pieces are all in place for this to be a strong deal with good institutional investor interest. As always, I caution investors interested in IPOs to wait at least thirty days after the offering before nibbling on some shares. Give Luminent some time to settle. Then, if you're feeling like a little bit of a risk taker, step into the photonic waves and ride the light!