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

To: steve berman who wrote (10589)	9/1/1998 11:02:00 AM
From: Grommit	Read Replies (3) \| Respond to of 42804

My opinion.... After hearing the CC and having my telephone calls unreturned, here is my opinion. 1. Their statement that investors will find new delight in their responsiveness is a stretch. I have not had my calls returned. The CC phone number was toll call and not issued in a press release. Small stuff, I know. I have still not received annual report or 10K. 2. They have done a few things which indicate to me they are over their heads and need to hire a CEO who has experience taking a company thru a time like this. a. They have rampped up R&D and Selling beyond the carrying capacity of the revenue line. And is scares me to hear in the CC that the need to invest in infrastructure and management. If they need to invest so much then the company is in a market which it cannot afford to be in, and they need to refocus or find a sponsor. b. Having so much cash on hand gives them the means to ignore reality for a long time and so I expect no significant change. c. $100M of the cash should be used for stock buyback. Let's say they buy even at an average price of $10 per share. 10,000,000 shares out of circulation -- 1/3 of the total. EPS in 1999 up 33%. Still $100M + in the bank and profitable. And if the stock price reaches $12 or so before they can buy back 10M shares, oh well. They stop and average price to buyback is still $10. By not moving on this immediately with board auth via phone and press release and action, thy miss opportunity and show ineptitude. d. Their inventory is too high. It really is. Shows lack of operational control and a true COO would correct it. No incentive to focus on this by the techo-CEO. e. Competition. MRVC is small fry and the big fish are not blind to the needs of the market. They can afford the product development and market development and MRVC clearly cannot. e2. MRVC could have significantly lower EPS in 1999 with any kind of revenue increase less than 30% over the coming 2nd half run rate. Run rate in 2 half is $236 million. BEST has $315 in 1999. With competition and recession and product slip -- what if they only hit 20% growth. Check my EPS model -- their EPS will be .50 or less. (A real CEO would set the company up so that 1.50 is worst case with 20% revenue growth -- with buyback and limits on expenses it could be done easily.) f. Externals - recession and world wide financial uncertainty will not help matters. summary They need a management change and a credible leader. They fumbled. They have potential but are trying to do too much. A stock buyback combined with refocus profitability in 1999 (lower spending) would allow them to show an impressive EPS in 1999 and attract more institutional investors over the next few months. Stock price would be in the teens with a buyback and higher EPS estimates issued by the analysts. With continued course the stock may very well stay as is until results are shown. The statement in CC that Q4 will be lower than Q3 is another problem (I missed it in the call, but someone posted it) and will keep the stock low until Q1. ........ personal note I sold today. My stomach is now calm for the first time in a week. I lost more than I can afford to lose because this was my largest holding. There are numerous opportunities that I see in this stock market, but for now, cash is where to be. The fearful will continue to sell over the next few months and Japan tanks, and recession possibly clicks is. And as individuals get their monthly mutual fund statements -- watch out. regards, grommit

To: steve berman who wrote (10589)	9/1/1998 1:52:00 PM
From: peacelover	Read Replies (1) \| Respond to of 42804

Steve, I agree with you. As one who got burned badly here, I say this mangement should be delegated to their technical expertise and new wall st smart mangement should take over to run the co. When it comes to management, noam and co are like "the keystone cops" mumbling and bambling around. They sank this wonderful co and my bucks. Thanks for the "never average down" advice. I saved myself more headache. Peace and good luck. peacelover