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

To: Rev. Paris Green who wrote (7161)	2/23/1998 10:12:00 PM
From: Sector Investor	Read Replies (4) \| Respond to of 42804

I just finished listening to the conference call (while treadmilling no less, so I didn't write anything down). I must say this was the most impressive MRVC CC I have listened to over the past 5 quarters. The negatives were of course the loss of NN and DEC, citing unusual circumstances - DEC selling it's networking to CS (not mentioned) and NN announcing layoffs and restructurings. The positives far outweighed the negatives, IMO - which I hope the ANALysts are smart enough to see. I have hope as almost every questioner said "nice quarter, guys". NBASE is now the number 5 enterprise networker, behind CSCO, COMS and BAY and just slightly behind CS. They will be number 4 soon. They are now a full line layer 1 thru 4 company. This is significant, because none of the big three can say this, I don't think (no layer 1 mfg). This, plus their ASIC densities and low cost structure is a huge advantage going forward. Sales staff took a big leap forward - from memory I believe from 17 to 47 domestic and from 36 to 44 international. Domestic is now larger than international, whereas before it was 2-1 international. R&D staff went from 88 to 168 (from memory) and they now have 4 R&D centers - excellent. Their ASIA exposure is mainly only with Japan, Korea and China - very little in the other countries. They say Japan remains strong, and they just opened a sales office in Beijing and are pursuing some opportunities there - this could be a big plus. The new RAS/RAC product from Xyplex sounds excellent. Xyplex had worked on it for 18 months and it goes into Beta next month - another big plus. The poor analyst who asked a question about it comparing it to the "New Oak"? product (whose is this?) almost had apoplexy when Noam or Schlomo said it was a 64 port product (the ANALyst said "but New Oak is over 2,000!"). Noam then said "but it's stackable", but I think that went over the poor guy's head. MRVC has already made management changes at Xyplex and told Xyplex "how MRVC spends money" - fast intro to cost controls - excellent. Moderate headcount reduction at Xyplex, but not affecting sales or R&D staff - also excellent. They indicated it would take 6 months to get Xyplex integrated. Another idiot ANALyst asked if they were planning a spinnoff of the MRVC fiber division. Noam and Schlomo indicated politely that this was counterproductive. When Noam patiently explained how having product from ASICs and from the fiber thru the network to the WAN opened up possibilities that were attractive to customers, the light dawned and he then said "isn't that a competitive advantage over your competitors?" [duh!], and Noam answered "of course it is". Noam also indicated that he was attuned to the "marketing to the street" image problem that a Paine Webber analyst brought up (the street under appreciates MRVC) and that after the "minutae" of the Xyplex acquisition died down (soon) this was on his plate (apparently they have already had internal discussions on this). The statement of "positioned for continued significant sequential growth in Q1" may have fallen on deaf ears, or so it seemed to me. The first question after this went immediately to the loss of NN and DEC as customers -typical ANALyst behavior to focus on the negatives and ignore or underestimate the positives. No questions from Bear Stearns - where were they? All in all an excellent session. If they go down tomorrow (I don't see it), they will still move into the $30s to stay very soon. Overall, Sector is Very pleased!