MRV Communications Inc. Q1 2010 Earnings Call Transcript

MRV Communications Inc. Q1 2010 Earnings Call Transcript
Publish date:

MRV Communications Inc. (MRVC)

Q1 2010 Earnings Call

May 10, 2010 5:00 pm ET


Anne-Marie Frisch – Investor Relations

Noam Lotan – Chief Executive Officer

Near Margalit – Chief Executive Officer, Source Photonics Ltd.

Chris King – Chief Financial Officer



Compare to:
Previous Statements by MRVC
» MRV Communications, Inc. Q4 2009 Earnings Call Transcript
» MRV Communications, Inc. Q3 2009 Earnings Call Transcript
» MRV Communications, Inc. Q3 2008 Earnings Call Transcript

Welcome to the MRV Communications first quarter 2010 financial results conference call. (Operator Instructions) I would now like to turn the conference over to Miss Anne-Marie Frisch, Investor Relations.

Anne-Marie Fri


Good afternoon everyone, and thank you for joining today’s conference call to discuss MRV’s first quarter 2010 financial results. I am joined today by Noam Lotan, CEO, Near Margalit – CEO, Source Photonics, and Chris King, our CFO. Noam will provide an overview of our consolidated results and integration and equipment businesses. Near will review the performance of our Optical Components business and Chris will then provide you with a more detailed look at our financial results.

This call is being webcast live on the investor relations section of the company’s website at

A replay of the webcast will be available on the company’s website for approximately 90 days.

Additionally, this call is being recorded and a reply of this call can be accessed by phone and will be available approximately two hours after the conclusion of this call. The phone replay will be available for one week.

Earlier this afternoon, the company issued a press release reports its financial results for the first quarter March 31, 2010. The release may be found on the company’s website at

or on the Form 8-K we filed today with the SEC. Additionally; there is a presentation on the investor section of the website that corresponds with today’s call.

During the course of today’s call, MRV’s management may make forward-looking statements about financial and business guidance, product introductions, customer development and the plans and objectives of management for future operations and the company’s future economic performance.

These statements, which can be identified when they are in the context such as, may, will, could, expect, intend, plan, believe, targets, estimates, forecast and variations of these words of use of these words with similar import reflect management’s current judgment on those issues. Because these statements deal with future events, they are subject to risks and uncertainties that could cause actual results to differ materially.

In addition to the factors that may be discussed during this call, and those contained in the press release issued earlier today, important factors that could actual results to differ materially are contained in the company’s annual report on Form 10-Ka for the year ended December 31, 2009, filed with the SEC and available on our website.

Any future or related specification that may be reference in today’s call are for informational purposes only and are not commitments to deliver any technology or enhancements. MRV reserves the right to modify future product plans at any time. Additional risks not known to us may also impair our business or results of operations and may prevent us from realizing our current expectations. By discussing the current perception of our markets and making these forward-looking statements, we are not undertaking an obligation to provide updates in the future.

I would now like to turn the call over to Noam Lotan, MRV’s CEO.

Noam Lotan

Good afternoon and thank you for joining us today for our first 2010 conference call. During the first quarter of 2010, we had a very strong start for the year and this was a milestone quarter for MRV.

During the prior quarter, Q4 of last year, we removed some major uncertainties surrounding MRV so that in Q1 we were able to focus on execution. I’m happy to report that Q1 was our third consecutive quarter with year over year revenue growth. More importantly, on a consolidated basis, we achieved positive operating income for the third consecutive quarter and delivered net income for the second consecutive quarter. Reported net income was $3.6 million or $0.02 per share.

I’m also proud to report that the three operation segments of the company, Optical Components, Network Integration and Network Equipment, all generated operating income in Q1. In addition, on a consolidated basis, we were able to demonstrate gross margin improvement for four sequential quarters.

While year over year revenue growth grew 5%, operating expenses decreased by 5%. These achievements are in part a direct result of the relentless focus on execution as well as improved market conditions. Improved business climate in the telecom industry, while definitely a welcome relief, also put pressure on component manufacturers resulting in longer lead times.

Revenue for Q1 2010 was $109 million compared with $124.4 million in the prior quarter and up 5% when compared with revenue in the first quarter of last year. While ahead of last year, consolidated revenue for Q1 decreased sequentially. Q1 is historically a soft revenue quarter due to year-end spending patterns, a late start in Europe, the Chinese New Year and annual re-pricing in the Optical Component group.

Overall, our market position remains strong and we’re seeing an uptick in opportunities. We see renewed optimism from all of our customers and within the industry. We’re encouraged by the positive sentiment, yet cautious about our outlook. Additionally, we are closely monitoring the situation in Europe as the recent development creates additional uncertainty.

Rising demand for bandwidth coupled with mobility are the catalysts for carriers updating their infrastructure. The need for investment equally applies to the core of the carrier network as well as to the access and aggregation functions.

Read the rest of this transcript for free on