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

To: BEEF JERKEY who wrote (9838)	8/3/1998 1:27:00 AM
From: Saul Feinberg Jr.	Respond to of 42804

Someone asked about the 23 million charges for Xyplex. According to 10/97, Xyplex had the following operating structure: (in thousands) XYPLEX Sales 75,663 COGS 37,004 Expenses Selling/Mktg 25,542 General/Admin 8,170 Research & Dev 13,465 Contrast with MRVC (12/97) Sales 165,471 COGS 94,709 Expenses Selling,General and Admin 27,365 Research&Dev 13,093 It is not a misprint. Xyplex had selling/g&a expenses of 33,712 and MRVC had selling/g&a expenses of 27,365. Xyplex had R&D expenses of 13,465 and MRVC had R&D expenses of 13,093. This despite the fact that MRVC's sales were more than double Xyplex's : 165 M vs 75 M. Without the benefit of a breakdown of what the charges MRVC took for Xyplex, and not being an insider, we can't really know the entire truth. But it does seem to me that Xyplex really had a high cost structure, and considering their legacy products were only going to do 40 million this year, it actually is worse. In closing, 23 M looks big, but it is not as big as it looks. Again, in my "margin of safety" argument, I assume the worst, and can come up with a decent valuation for MRVC. Obviously, I don't believe MRVC are crooks, but let's suppose they are, and the stock is still decently priced given that assumption.