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

To: NASDBULL who wrote (10768)	9/21/1998 1:42:00 PM
From: Bruce L	Read Replies (2) \| Respond to of 42804

<Any target price for MRVC being bought out?> IMO a buyout at this time is very unlikely; possible, of course, but unlikely. Here's why. 1. According to a recent post, the company has adopted "poison pill" anti-takeover provisions that would make it far more expensive for any unfriendly takeover. 2. Management owns a substantial percentage of the outstanding stock so that for a raider to get a majority it would take an almost impossibly high percentage of the "float." 3. Over the past couple years -at a time when the company was widely perceived to be fast growing and successful- company management regularly shot down all talk of a possible buyout; this at a time when that management could have shopped their shares for in excess of $50. (Parenthetically I should say that I don't "know" Noam & company but as an investor and diligent reader of this thread believe that this was a matter of personal pride on their part. They wanted to build their own stand-alone independent networking company and money was not their primary goal.) 4. I believe that this desire of management to build a stand-alone company continues as strong - or stronger - than ever. At the last conference call, Noam said that earnings for the current quarter would be down 10-15% from previous expectations, primarily because of weakness in Europe where historically MRVC has gotten most of its sales. He said that new products were delayed but would ship in this quarter; that for the 3rd quarter there would be a sequential increase in revenue (not earnings); that carrier class products would be beta tested and shipped in 1999; that the company's new products because of their price and complexity required more sales and post-sales support and that the company had recently hired employees to fill this need; that the company's new products were in advance of anything being developed by any other networking company. FWIW I find the above statements credible, by which I mean MRVC management perceive them to be true. My conclusion from all of the above is that MRVC is not even close to being amenable to a buy-out. Partly as a matter of pride. Also, from their standpoint it would be foolish to sell out at anything like today's levels until they see developments don't in fact play out as they expect: i.e., sales improve in Europe and elsewhere, new products ship successfully, etc. I just don't see a merger in the cards.