Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Greg h2o who wrote (42322)	2/8/2005 7:02:10 PM
From: akmike	Respond to of 42804

Hello Greg, I would find it hard to pin down what I thought was appropriate since MRVC has had no history of making profits under this particular business model and the actual operating margin which has heretofore been non-existent would be an important driver. Intuitively, however, a company like MRVC which has not attained profitability would sell for significantly lower p/s than a company such as Sonus which got to profitability only last year but consistently generated high 50% and low-mid 60% gross margins prior to profitability. Sonus sold for more than 10 times gross sales in Jan of 04. Where MRVC is reselling other's equipment in Europe there is no reason to expect much in the way of gross margins and if and when they reach a breakeven point their operating margin could be quite good. Where they are selling commodity optical equipment they will have low margins and low profitability, imo. So far it isn't a business model that I would pay any premium to revenues. Best regards, Mike