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To: Johnny Canuck who wrote (34985)	11/1/2001 4:08:21 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 70601

MRVC CC Oct 29,2001 Q3 Challenging time for telecom and especially optical components. One of few companies growing top line rev, excluding LMNE. Continued growth into 4 th Q. Optical Access CFO taking over as CFO of MRVC. Q3 non LMNE results exceeded previous guidance. Due to broad product offering, customer base and geographic coverage. Q4 Rev guidance increased 44 to 58 mil without LMNE 71 to 77 with LMNE 10 percent rev with out LMNE 6 percent over all growth in rev (including LMNE) CW first order, Miracom testing of CW product, results show best results CW exceeded CSCO and JNPR routers in test. LMNE sales eroded during Q3. Focus on metro and access market where slow down was less. Customers have surplus of products. New orders at lower ASP. Excess capacity at carriers. All will keep demand for LMNE products low. Carriers must recover first before LMNE gains traction. LMNE and MRVC reverse merger. Next break through in optical will be passive and active integrated products. Transceivers now commodity products. Merger will help to develop this next generation products. Have ASIC capabilities in one of holdings. Can't raise more capital Rev on positive up swing, but not enough positive cash flow to support other holds. Most of MRVC reflects LMNE value only. MRVC float 5 time LMNE float. More liquidity. Merger will generate cost saving. Financials: Encouraged by what we see in Q4. Have visibility into Q. Upward Q4 rev guidance and 2002. Non LMNE Rev 61 mil. Higher than July guidance. In July up to 56 mil range. Q4 Rev 54-58 mil up 10 percent Q-Q Y2002 220 t0 250 mil up from 180 to 210 mil range. Charges: Q4 EPS: Loss of 1 cent Including LMNE up 6 percent Q-Q, 71 to 77 mil EPS 1 to 5 cent loss Y2002 300 to 350 mil rev include LMNE 69.7 mil Rev Q3 including LMNE 5 cent loss Q3 including LMNE Cash 212.9 mil Consolidated (MRVC+LMNE), LMNE cash 97.3 mil, cash 66.7 mil for MRVC cash 88.6 mil in convertibles still outstanding, no shares converted in Q Q: Update on Optical Access? A: For Q rev same as last Q. No specifics. No deployment for New York disaster. Solidify opto-switch product line. Old product, optical access install product in Arizon Diamond back facility. Should be ready for upgrade soon. Q: CW contract details? A: In Europe. Less than $1 mil. Q: Optical access. Contract in Europe and China mentioned last Q. Update? A: Europe contract, slowly deploying. Slower than expected. China. No change from last Q. Q: Free space optics or other products? A: Switches and free space. On contract more on switches, other more on free space. Q: Go through holding. Any generating positive rev. A: Zuma. Centerpoint. Generating rev. Zuma not significant to report. Q: What percent of Centerpoint? A: Less than 20 percent of Zaffire owned before merge. Now more than 5, less than 10. Q: Will you be selling Centrepoint position? A: Too small to matter. Q: In Y02 will you consider an IPO on Optical Access? A: Has own accounting. Ready to go when market is ready. Q: Model to take small start up and then IPO. With shortage of capital and poor IPO market, has your strategy changed? What will you do to generate cash. A: Have cash after LMNE reverse merger of 160 mil of free cash. Should be sufficient to allow us to nuture company. Facilitating uniting companies. More of an operating company now. Q: Will you swap out some of these companies to re-focus on high grwoth areas? A: Always re-evaluating. Broad product line and geographic coverage help us to weather recession. Q: Cash flow from operations? A: No break out. Burn of 12 to 15 mil in Q. Have 160 mil in free cash. Some companies ready for M&A activity. Expenses down in Q. Will continue. Q: DSO? A: 87 days vers 63 day last Q, up due to decline in rev LMNE and increase in AR. Q: Any goal to be cash flow positive? A: Working to that goal. Q: How many customers testing CW? A: 10 customers, some in US, Europe and 1 in Israel. Some further along. Some just beginning. [Harry: Still one of the worst calls out there. They don't give any indication of a road map of where they are going. What do they consider high growth areas? What companies will they drop to focus on those growth areas? Which companies do they hold that show the most near term promise? How does CW compare to other companies in terms of positioning. Beside the benchmark test, what distinguishs CW. ]