MRV: Wait 'Til Next Year...

MRV Communications Inc.'s (Nasdaq: MRVC) revenues rose 21 percent from a year ago, and its managers today expressed their confidence that the company's business is heading out of the doldrums. "We are optimistic that [the third quarter] will be the bottom of the downturn for MRV," says Noam Lothan, president and CEO of MRV (see MRV Announces Q2 Returns).

Revenues for its second quarter ended June 30, 2001, were $89.5 million, compared to $73.9 million for the year-ago period. When excluding its Luminent Inc. (Nasdaq: LMNE) unit's results, the company's revenues for the quarter were $49.5 million.

The company's pro forma earnings were $1.3 million, or 2 cents a share for the quarter, compared with $1.2 million, or 2 cents a share a year ago.

After adding in the various charges left out of the pro forma results, MRV actually lost $94.1 million, or $1.24 a share for the quarter, compared with a net loss of $27.8 million, or 44 cents a share for the second quarter of 2000.

Some analysts on the call expressed frustration that the company -- a holding company that owns several subsidiaries -- did not break down how the non-Luminent revenue was divided among its portfolio companies.

Some of MRV’s other holdings include iTouch Communications, Optical Access Inc., NBase-Xyplex, Zaffire Inc., Zuma Networks Inc., and Charlotte’s Networks Ltd. So far, Luminent is the only one that is publicly traded and producing significant revenue. Even though Optical Access is in registration for an IPO with the SEC, it’s clear that none of the MRV companies is going public in the near future.

MRV officials were mum on another issue that has caused debate among shareholders: the distribution of shares of its Luminent unit, which went public last year (see MRV Spinout Bound by Bonds). They did not give a new timetable for the distribution of Luminent shares to MRV shareholders but did imply that it wasn't happening any time soon.

Excluding its results from its Luminent unit, MRV says it expects revenues to be between $46 million and $50 million for the third quarter. This is up from its earlier estimate of between $43 million and $47 million but will be slightly down to flat when compared with the second quarter results.

For the fourth quarter, MRV expects $52 million to $57 million in revenues, which is also up from earlier estimates. The company expects its revenues for the year 2002 to hit the $220 million to $260 million range.

Shares of MRV closed up $0.25 (4.35%) to 6.00. In after-market trading on the Island ECN, the stock was trading up 1.14, at $7.14. It traded at $57.88 a year ago.

- Phil Harvey, Senior Editor, Light Reading
http://www.lightreading.com