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

To: w2j2 who wrote (10361)	8/28/1998 10:25:00 AM
From: DAVID BANISTER	Read Replies (1) \| Respond to of 42804

MR PINK... well, first of all its a product transition mainly folks. Many of you are panicking such as wall st today. Looks like I will get a margin call myself. OUCH. But, demand is soft because customers will delay purchases when they know an upgrade is coming out. If this upgraded product is not ready to ship, you have a double effect of higher expenses and no offsetting revenues. Obviously this hurts earnings in short term, stock gets slammed. If they get the product out in 4th quarter, revs will resume upward trend and the profits will be much higher than expected in 4th quarter. This happened to Cisco when they switched to the Big Fast Router product line... they had some concerns on the street that orders were falling off, when in fact customers were pausing to buy the new product. Cisco had a delay in bringing that out on a timely basis. Same thing happened to Ascend communications as well in 97... a product transition messed them up too... customers delayed purchases. Now you noticed both stocks recovered quite a bit off those drops in price. MRV is still a quality company, investing more than 10% of revenues in R and D and will recover from this mess. None of the stuff PINK talked about has to do with this drop... its a product transition drop and thats why the stock fell off, others on the street knew about it who did their homework. This stock will recover in 2 quarters, and or be bought out first by Lucent.