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

To: Bruce L who wrote (10888)	10/17/1998 10:21:00 PM
From: Sector Investor	Read Replies (1) \| Respond to of 42804

Thanks Bruce, From my reading of the various threads, there is also a lot of negativism regarding the drop in Gross Margins in the warning. MRVC said competition is increasing, mentioning CSCO and INTC in addition to COMS and NN, and that margins would be lower - to 43% or slightly under. The "competition is increasing" got translated to MRVC is being "eaten alive" by CSCO. Before we jump to this conclusion, let's look at Gross Margin Historically: Q3 1996 41.39% Q4 1996 42.66% All 1996 42.03% Q1 1997 43.26% Q2 1997 42.10% Q3 1997 43.29% Q4 1997 42.47% All 1997 42.70% Q1 1998 44.09% Q2 1998 44.10% Q3 1998E 42.90% We see that quarterly GMs normally fluctuate quite a bit, and they had risen in the first half of 1998. Q3 is just back near the high end of 1997 levels. OK, so MRVC was affected by the world economic problems in Q3 - just like many other companies. But if GM comes in near 43%, it is certainly not a number to set off alarm bells. The real question is what will happen in Q4 and 1999? The CC and Annual meeting may answer some of those questions.