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

To: signist who wrote (10982)	10/27/1998 3:40:00 PM
From: Greg h2o	Read Replies (3) \| Respond to of 42804

Here's the BEST report: MRVC: Downgrading To Attractive On Low Visibility Bear Stearns & Co. Inc. October 27, 1998 Bob Lam, CFA (212) 272-7670 10/27/98 blam@bear.com Subject: Change in Recommendation Industry: Data Networking BEAR, STEARNS & CO. INC. MRV Communications (MRVC - 9 1/16) - Attractive Downgrading To Attractive On Low Visibility _________________________________________________________________ *We are downgrading MRVC shares to Attractive from Buy on the following reasons: 1. Visibility remains very low in future business conditions. While we had expected that visibility would improve in Q4, we are not seeing any clear signs of turnaround in business. 2. When the company pre-announced earnings shortfall on 8/27, it indicated that its WDM and high-speed switching products would be delayed for 3 months. Our recent discussions with customers indicated that the delay could be longer than expected. 3. We were disappointed that the company's lack of presence in the recent Interop trade show. Interop is the most important networking show with participation form many major customers. The lack of presence by MRV prevented the company from attracting new customers. 4. We believe the networking hardware market is becoming extremely challenging for smaller vendors. The enterprise space, dominated by Cisco, Bay/Nortel, and 3Com is maturing. The service provider space is now the focus but is very difficult to break into given the entrenched positions of Cisco, Lucent, Nortel, and Ascend. The recent disappointing results from smaller players such as FORE have confirmed our belief. Moreover, pricing environment in the enterprise space appears to be very aggressive. We see continued pricing pressure on MRV's switching product lines. We are rating the stock Attractive on the company's good technologies, potential in optical networking, and its fairly strong indirect distribution in Europe. **We are maintaining our estimates pending the company Q3's release on 10/29 after the market close. We are looking for EPS of $0.12 on $57 million revenues. _________________________________________________________________ MARKET CAPITALIZATION: $ 260 million SHARE COUNT: 28.6 million shares EARNINGS Q1 Q2 Q3 Q4 Mar Jun Sep Dec Year P/E Current 1997 $0.19A $0.21A $0.23A $0.25A $0.88A 10.3x Current 1998 $0.26A $0.31A $0.12E $0.15E $0.85E 10.7x Current 1999 $0.90E 10.1x _________________________________________________________________ Other Companies Mentioned: Cisco Systems Lucent Technologies Nortel 3Com