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

To: V who wrote (7985)	3/31/1998 6:07:00 PM
From: Saul Feinberg Jr.	Read Replies (4) \| Respond to of 42804

Given the current complexity that is involved in building LAN/WANS and what have you, i dont think that the commoditizing of switches is imminent, as suggested by people who liken this market to the NIC cards and the network adapter cards. It is true that valuing a networking company will always be much, much more difficult than say a McDonald's. I have to think that just as book-value is used to evaluate traditional companies, intellectual capital should be used to evaluate hi-tech companies. Surely the intellectual capital at Microsoft is worth some amount of money. I mean the amount of time/dollars you spend recruiting and coming up with the group of people who have IQs and work for a common goal surely cannot be worth zero in the balance sheet, (although it is by GAAP standards). Given this, I'd say that MRV's intellectual capital is high up there, because they recruit a lot of people from CalTech, and they have a very low turnover rate of engineers. And although I am not Jewish, I really think the Jewish people are really, really smart. And MRV is run by smart, Jewish people. It is also true that competition from the big boys will only hurt and not help. But with all the stuff that needs to be done (e.g. fiber-optic connections for new neighborhoods, gigabit ethernet), some of which have not been standardized, I think the future for MRV is not as bleak as the current market valuation seems to suggest. The question we have to ask ourselves is this: If someone gives you $650 Million to compete with MRV, would you take the offer? If the answer is yes, then MRV is overvalued, if the answer is no, then obviously MRV is undervalued, since $650M is the current market cap. Now suppose you start a networking company and run it as frugally as MRV and hire a bunch of PhDs from MIT then you might have a chance to compete with MRV. I wish someone all the luck to do it, but as for me, I would just buy MRV shares on the open market, be a cheerleader, and get out of the way ...