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

To: J. Conley who wrote (5704)	10/29/1997 11:21:00 PM
From: Roger Brown	Read Replies (1) \| Respond to of 42804

Took a look at the balance shhet today and was duly impressed. With current and long term liabilites totaling $27.6 MM compared to total assets of $208 MM, financially, they are in solid shape going forward. To be sure, MRV's Return on Equity is going to be low due to the HUGE Shareholder's Equity they now have ($180 MM)... 13% in fact at an annual run rate from this Q.... However, a positive is that its Book Value from ~ 28.5 MM shares outstanding adding in the capital just raised lowers its market price to book multiple to 4.8 times.... They should now have the capital in place to move forward without as much dilution.... I'm prepared for flat sequential EPS due to the ~2.6 MM added shares from the offerring...Who knows though, they could come in at .24... Looking at the balance sheet, everything seems to be in control from the Accounts Receivables to inventories...Nothing is out of line compared to others in the industry.... Nevertheless, MRV did slow revenue per share growth from Q396 to Q397 to 40%.... And with the net income percentage at 14.1% of revenues, we can only expect to go up to possibly 15.5% or so by this time next year which with flat revenues will help out an additional 10% in EPS...Course, they won't be flat.... A PE of 39 is very respectable for this company... I'm looking for it to hang out in the future in the 40's...That's between $32-$39 for the present Q.... However, the EPS growth momentum will slow considerably this next Q...If they come in @.24, the trailing EPS will be .87... This gives the same PE range for Q198 of $35-$43.... That's the range I'm assuming going forward as an investment... If this gets into the high part of the rage, I sell out temporaily and get on the sidelines...This will not be able to sustain a PE of 50... after this Q...

To: J. Conley who wrote (5704)	10/30/1997 1:36:00 AM
From: Andrew Furst	Respond to of 42804

I agree completely - it's important to keep product introductions (such as MegaSwitch II) in mind when looking at sequential growth rates, year-over-year comparisons, etc. A lot of people here are focused on past growth rates, which is fine. However, considering the upcoming product transitions, I feel MRVC's prior growth "history" is somewhat irrelevant. Consider ASND's revenue history - 1992----7 M 1993---16 M 1994---39 M 1995--152 M 1996--549 M Who in 1994 would have predicted ASND's massive revenues of 1995,1996? ASND entered 1995 with the "hot" products at just the right time, and its growth rate actually accelerated. If MRVC gets everything just right, it could be entering a period of higher than "historic" growth. Or, that rate could slow, as some seem to feel will happen. It all depends upon product introductions, acceptance.