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

To: signist who wrote (10692)	9/5/1998 6:28:00 PM
From: Andy H	Read Replies (1) \| Respond to of 42804

John, If specific guidance is given, it should be disclosed to all. That said, it is hard to police this activity unless the analyst's rationale makes it clear that the numbers are coming straight from mgt in unadulterated form. As you know, most earnings estimates are derived from estimates of various line items, some with mgt guidance, others from the analysts expectations re various factors of market growth, success of new products, etc. I doubt the MRVC has any idea what next year will look like given that the acceptance of a new product cycle, which is now delayed, will determine their fate. I suspect that in these situations of tremendous uncertainty, analysts look at best case and worst case assumptions for the product acceptance and other variables, and pull a weight average out of their hat based somewhat on gut. Projections are only as good as the assumptions. If the product cycle is further delayed or does not go well, the projections will go down accordingly as we move on. The converse is true, and when that occurs, the stock price will be driven upward accordingly. Risks are high here. The tech landscape is littered with permanently beaten down companies whose demise began with "its only a one quarter product cycle transition issue." This explains the severe reaction to MRVC's announcement. The product delays are not always solely due to internal execution (not a good sign either), but due to competing products surpassing a company's new products even before they are released, meaning back to more product development before release. Not a good sign. I have no opinion whether that is the case here.

To: signist who wrote (10692)	9/5/1998 10:31:00 PM
From: Robert G. Harrell	Respond to of 42804

John, I've noticed many times on conference calls that analysts will ask questions that management will decline to answer publicly on the CC but say they will respond to privately to the analyst. One such question was asked on MRV's call Monday. The analyst was asking in general about how they were modifying their financial model. Edmund asked what he wanted to know more specifically and the guy said one of the specifics he wanted to know was about ASP's. Edmond said he would have to get back to him on it. A reduction in the ASP on a few key products could be enough to change an earnings estimate. Also, if you look back at the Conf. Call notes I posted, there was a question in which the analyst asked, "could gross margins be well below 42%?" The answer was yes. That too could account for a change in the numbers. It would be interesting to see if an individual investor could call the company and ask for the same information promised to an analyst in a conference call. I would think that a case could be made that failure to answer would make the information given to the analyst insider info. but I'm not an attorney. Usually when they decline to answer a question, it is for competitive reasons and I can understand that in a way. I guess there is an understanding that the analysts will keep the private information confidential and that it will be reflected in their publicly available (more or less) estimates and reports. It is so common that the SEC obviously doesn't think it is improper. The guys on Squawk Box complain all the time about companies which call the analysts first on a controlled call and then issue a press release about good or bad news. Again, apparently the SEC doesn't object even though it seems to be giving the big firms a competitive advantage. Hope this helps. Bob