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MRVC - (recommended
to subscribers
on 1/24/06)
BOUGHT
at $2.14 SOLD
at $4.09
On October
27th 2005 MRV Communications Incorporated, a provider of networking
equipment and optical components, reported 3rd quarter revenue of $65.9
million, up 5% from a year ago and up 2% sequentially. Net loss was
$3.1 million or 3 cents per share which compares to a loss of 4 cents
per share in the year earlier period.
MRVC divides it's business into a networking
group and an optical components group. The networking group includes
routers, switches, as well as specialized networking products for
defense and aerospace as well as other applications. In the 3rd quarter
the networking group accounted for 82% of total revenue. On a stand
alone basis the networking group had an operating profit of $2 million
in the last quarter. The optical components group includes optical
communications components sold by a wholly owned subsidiary. In the 3rd
quarter the optical group accounted for 18% of
total revenue and had an operating loss of $3.8 million however the
company expects this part of it's business to grow in 2006. It also is
in the process of transitioning manufacturing to Taiwan and China which
will reduce costs and improve margins going forward.
During the first 9 months of 2005
international sales accounted for 73% of total revenue. There was no
single customer that accounted for 10% or more of total revenue during
the first 9 months of 2005.
MRVC expects revenue in the 4th quarter to be
$73 - $77 million with a net loss of 1 to 3 cents per share.
MRVC has cash & investments worth $74.4
million or 71 cents per share. The company has $48 million of debt. The
net cash position ($74.4 million - $48 million) is $26.2 million or 25
cents per share. Book value is 83 cents per share.
At the current level the stock has a
price-to-sales ratio of just .8 and a price-to-book ratio of 2.6.
In the chart below you can see that in early
January MRVC broke above it's 200 day moving average and ran up to
$2.50 per share. The stock's recent pullback to the 200 day moving
average appears to be a good entry level.
10/17/06-
SOLD AT $4.09 FOR A GAIN OF 91%. DURING THE SAME TIME PERIOD THE NASDAQ
WAS UP 0%.
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