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Optical components

MRV Closes Books on Fiberxon

MRV Communications Inc. (Nasdaq: MRVC) has completed its financial audit of Fiberxon Inc. and appears ready to get its optical-components spinoff rolling.

MRV had completed the acquisition of Fiberxon in July despite being unable to clear up "irregularities" in the startup's books -- much to the chagrin of some investors. (See MRV Sags on Fiberxon Buy.)

The plan is for MRV to combine its LuminentOIC Inc. subsidiary with Fiberxon to create a powerhouse for optical transceivers and lasers. (See MRV Buys Fiberxon, Preps IPO.) MRV has already picked the name Source Photonics for the combined company.

Transceivers for fiber-to-the-home will likely be the hallmark of Source, which will count Verizon Communications Inc. (NYSE: VZ) among its customers.

With the Fiberxon buy, MRV picked up three Asian manufacturing facilities, including one in Shenzhen, China, that impressed the heck out of analyst John Harmon of Needham & Co. "We were impressed with Fiberxon's operations in Shenzhen and consider it the most advanced optical assembly and test facility we have seen," Harmon wrote in a report published this morning.

So, how did Fiberxon do on its financials? It turns out the startup's growth hit the pause button in fiscal 2005, contrary to management's old predictions of $60 million in revenues. (Fiberxon's fiscal years end on June 30.)

The company was profitable in fiscal 2004, with net income of roughly $483,000, or 1 cent per share, on revenues of $39 million.

In fiscal 2005, however, Fiberxon sank, to losses of $5.9 million, 35 cents per share, on revenues of $34.2 million.

Fiberxon bounced back in fiscal 2006 to revenues of $48.4 million. The company continued losing money, though -- $8.5 million, or 48 cents per share.

Table 1: Fiberxon's Financials
Fiscal year
2004
2005
2006
Revenues
$39.0M
$34.2M
$48.4M
Net income (loss)
$0.5M
($5.9M)
($8.5M)
Earnings (loss) per share
1 cent
(35 cents)
(48 cents)
Source: MRV Communications




For the six months ended June 30, 2007, Fiberxon reported losses of roughly $211,000, or 1 cent per share, on revenues of $40.6 million, compared with losses of $1.8 million, or 11 cents per share, on revenues of $19.1 million for the same period a year ago.

— Craig Matsumoto, West Coast Editor, Light Reading


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Pete Baldwin 12/5/2012 | 3:01:35 PM
re: MRV Closes Books on Fiberxon Well, their business did get to be sizable. You can see why they wanted to go public (and why they couldn't, given the way they stalled for a year there.)
c_headed 12/5/2012 | 3:01:35 PM
re: MRV Closes Books on Fiberxon MRV paid $131 million for Fiberxon. If you annualize the first half sales out, annual revenues come to about $80 million. That puts the price to sales ratio at about 1.6x sales (131/80). Avanex trades at 1.8x, Bookham 1.2 and JDSU at 2.4x. MRV trades at about 1x sales. Looks like they paid a reasonable price, but it was not a total steal.

If they can keep the growth rate up and find some synergies with Luminent this could be interesting to watch.
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