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

To: B.REVERE who wrote (8290)	4/22/1998 9:12:00 PM
From: michael modeme	Read Replies (1) \| Respond to of 42804

I take Gruntal's reiteration today as good news for earnings. Perhaps the only time I listen to analysts is when they make recommendations a few days prior to earnings. The analysts in these cases (usually) have kept in close contact with the management and have good guidance and want to look good before earnings come out. If Gruntal was unsure about earnings they would wait until after earnings are out to take a position (recommend/downgrade/reiterate). And with other solution-to-higher-bandwidth companies coming out with good earnings, I think MRVC will probably do well. It's all speculation, but I would be surprised if the majority of analysts making a statement a few days before earnings were wrong. Cheers

To: B.REVERE who wrote (8290)	4/23/1998 9:00:00 AM
From: Greg h2o	Read Replies (1) \| Respond to of 42804

GRUNTAL & CO., L.L.C. <<pounding the table>> Investment Research Morning Comments Page 1 of 2 FAX FLASH - For Immediate Distribution This report includes information obtained from sources believed to be reliable but no independent verification has been made and we do not guarantee its accuracy or completeness. Opinions expressed are subject to change without notice. This report should not be construed as a request to engage in any transaction. Gruntal & Co., L.L.C. or its affiliates may take a position or engage in transactions with respect to securities identified herein. OGruntal & Co., L.L.C. 1998. All Rights Reserved. Gruntal & Co., L.L.C. ú Established 1880 ú 14 Wall Street, New York, NY 10005-2176 ú Telephone (212) 267-8800 Member New York Stock Exchange, Inc. and other principal exchanges ú Member SIPC MRV Communications, Inc. (MRVC* + /NASDAQ/$28 3/8) Rated: Strong Buy Inv. Suitability: Aggressive Growth 12-Month Price Target: $43 52-Wk Range: $39 1/4 - $18 1/4 Market Capitalization: $806MM Institutional Ownership: 45.3% Dividend/Yield: Nil/Nil Avg. Daily Volume: 580,606 L.T. Debt: N/A 5-Yr. CAGR: 40% Fiscal Year Ends: 12/31 EPS: Q1 Q2 Q3 Q4 FY 1999E . . . . $1.72 1998E $0.26 $0.29 $0.31 $0.36 $1.23# 1997A $0.18 $0.21 $0.23 $0.25 $0.88# 1996A $0.09 $0.11 $0.12 $0.16 $0.46# EPS on operations. * Gruntal & Company L.L.C. makes a market in this security. #Quarterly estimates may not total due to rounding. Summary: We are reiterating our Strong Buy investment rating on the shares of MRV Communications (MRV). The company is expected to report results for 1Q98 after the close on April 27, 1998. The company has an excellent track record in delivering on investor expectations and we expect this time to be no different. The shares offer aggressive growth-oriented investors an attractive investment vehicle in a rapidly growing company that participates in a high-growth market. Description: MRV is a rapidly growing designer, manufacturer and marketer of high-speed network switching products (sold under the NBase brand name) and fiber-optic transmission systems (sold under the MRV brand name) that enhance the performance of existing data and telecommunication networks. Within these two segments, the company concentrates on computer networking products such as LAN (Local Area Networks) switches, hubs and related equipment and fiber-optic transmission components for transmitting voice, video, and data across enterprise, telecommunications and cable-TV networks. The company combines its expertise in advanced switching and proprietary fiber-optic technologies to create state-of-the- art products and solutions. Key Points: ú Expect first quarter 1998 results to show continuation of solid growth in revenues and earnings. MRV will be reporting results for the first quarter ended March 31, 1998 after the close of markets on April 27, 1998. We expect a continuation of the recent trend of solid year-on-year and sequential growth in both revenues and earnings. Management has already indicated it plans to take a one-time charge in connection with the Xyplex Networks acquisition completed during the quarter. Our revenue estimate for the quarter is $55.9 million and primary EPS estimate is $0.26 (excluding the anticipated one-time charge). ú Expect to see improvement in balance sheet regarding receivables and inventories. The increase in receivable days sales outstanding (DSOs) and inventory days outstanding at the end of 4Q97, in our view, has been a negative for the stock and has caused many institutional investors to either sell their stock holdings or take a wait-and-see approach prior to initiating a new position. We expect to see a modest improvement in receivable DSOs from 87 days in 4Q97 to the 85-days level. We would view this level to be in line for a company such as MRV that does significant business in Europe. On the inventory front, we expect to see a significant improvement in inventory days outstanding from 135 days to approximately 117 days. We believe the market will react very favorably if the company can deliver on these improvements. ú Believe that MRV shares continue to be very attractive from a valuation standpoint. Despite the recent appreciation in the share price, which was long overdue, MRV's shares continue to trade at a modest P/E multiple (23 times 1998 EPS estimates) and a discount to the long-term earnings growth rate of 40%. The high-end networking marketplace in which MRV participates continues to exhibit robust growth driven by strong end-customer demand to upgrade the corporate network infrastructure. In addition, we believe the recent signs of investor enthusiasm for technology stocks and the participation of small-cap and mid-cap stocks in the recent market run-up bode well for MRV shares. We are maintaining our 12-month price target of $43 and our STRONG BUY rating on the stock. Data Communications-Networking Vivek N. J. Rao, Sr. V.P. Garry I. G. Parton, Associate (212) 547-1607 April 22, 1998