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Strategies & Market Trends : The Thread Formerly Known as No Rest For The Wicked -- Ignore unavailable to you. Want to Upgrade?

To: okelly who wrote (12501)	2/7/1999 4:51:00 PM
From: STU	Respond to of 90042

tim, Over the past year we have seen MRV fall from $39/share in September ‘97 to its current $7.5/share. Not since 1995, when the company had annual revenues of $39 million, has the company's shares been this low. 1999 sales should exceed $300MM. Since 1995 Revenues and profits have grown both internally and through key acquisitions. YEAR REVS Profit 1996 88 MM 10.4* Purchased Fibronics for $25MM 9/96 1997 165 22.5 E1998 255 16.0* ** Purchased Xyplex for $53MM w/ chgs E1999 305 12.7 Margins QTR REVS Profit Prior YR 12.20 % 12/96 31.0MM 3.8 1.5 MM 12.08 % 3/97 35.6 4.3 1.8 13.16 % 6/97 39.5 5.2 2.2 14.04 % 9/97 42.0 5.9 2.6* 14.66 % 12/97 48.4 7.1 3.8 12.33 % 3/98 60.8 7.5 4.3 13.24 % 6/98 65.7 8.7 5.2 2.40 % 9/98 62.6 1.5 5.9 - 3.03% E12/98 66 (2.0) 7.1 0% 3/99 72 0 4.3

To: okelly who wrote (12501)	2/7/1999 4:52:00 PM
From: STU	Respond to of 90042

MRV made key acquisitions in 1996 and 1998 helping the company's leading edge products to remain competitive. Eighteen months after Fibronics was acquired, the company reached record profit margins of 14.66% in December ‘97. The most recent acquisition in February ‘98, Xyplex, doubled the company's sales and engineering staff. This was the company's largest acquisition to date and has proved to be its toughest during a period when the European economies were temporarily holding back capital expenditures for fear of how the Asian and South American recessions would effect their businesses. Fourth quarter profits are expected to be slightly negative, but sales are expecting a sequential increase over September '98 growing from $62.6MM to $66MM and up 65% year over year. The recent measured effects of the world economic slowdown has weighed positive upon the U.S. and the European Economic Community due to commodity prices hitting 20 year lows and interest rates being lowered by world governments to help spur growth. Historically, this has proven to be the greatest fuel to the growth of small companies, such as MRV. With 50% of the companies revenues coming from Europe and Europe expecting to increase capital expenditures to record levels in 1999, MRV's earnings should recover in the second half of the year. MRV continues to be technologically innovative, with a past history of being first to market with – ? 10/100 Fast Ethernet Switches ? Gigabit Ethernet Switches Their product portfolio is continually expanding with recent announced products over the past year including – Fibre Optic Drivers, AcceleRouter and Optical Networks Virtual Private Network Switches Multi-Vendor Functionality of all Products Dense Wavelength Division Multiplexers with upcoming announcements on the - *Systems 8000 Open Switch Router (vs. Cisco's 8500) MRV can now service Metropolitan-area networks, Wide-area networks, Local-area networks, Local-area network switches, and in mid 1999 a new class of Long Distance Carrier Class Routers will be introduced, known as the Terabit Router, entering MRV into the vast $175 Billion Telecommunications-equipment Business. As we enter 1999, MRV has maintained its markets during turbulent price competition and analysts expect profitability to return by March of 1999. Although the company does not pay a dividend, it is buying back a million of its own shares and has repurchased $10MM in debt for $5.3MM. The balance sheet is very strong with a current ratio of 3:1 and cash equivalents close to $150MM. When viewing the earnings of 1998 it is important to remember the company charged its $53MM acquisition against the March '98 quarterly earnings which should net a $26MM loss for 1998. I expect over the next 9 months to again see and hear expectations of profit margins exceeding 12 – 14% that will lead MRV into the year 2000 with earnings over $50MM. We are moving into one of the strongest growth Waves of the past 100 years and can expect MRV to participate with all cylinders running -optics -LAN -WAN -MAN -Remote Access -Network Management Good Luck to All