MRV Communications

» see mrv.com as it lived, on the wayback machine

~ the obit ~

The Nasdaq peaked in March 2000, and I followed it the way a schoolboy in Turkey follows weather in another hemisphere. MRV Communications was one of the tickers in those stories. Ask me then what the company actually made and I would have had no answer, which was fair enough, because the answer was complicated.

The company was organized in July 1988 as MRV Technologies, a California corporation, and reincorporated in Delaware in April 1992 under the name it died with. Its founders were Shlomo Margalit and Zeev Rav-Noy, and the original business was fiber-optic components: the lasers and transceivers that light actually goes into. That business was real. The rest of MRV grew by purchase. It bought Galcom in Israel and Fibronics, and in February 1998 it paid about $35 million for Xyplex, which by then had been sold twice already and was cheaper each time.

By 2000 the ticker covered two quite different companies. One was the components arm, renamed Luminent, making the lasers and transceivers. The other was a European systems-integration operation that resold other vendors' networking kit across southern Europe and Scandinavia. That second business was never a technology business at all, and it supplied most of the revenue for the next decade. MRV's own Ethernet switches and optical transmission gear sat somewhere in between.

The stock went from under $5 in the first quarter of 1999 to $97.44 on 7 March 2000, three days before the Nasdaq peak. On 20 March, the closing price valued the MRV stock held outside the company at almost $3 billion. In May the shares split two for one. In November, MRV floated Luminent at $12 a share and the thing closed its first day at $12.12, which is what a window looks like when it has already shut.

~ the rap sheet ~

~ two different peaks ~

MRV's share price and MRV's revenue peaked eight years apart. The stock topped out in March 2000. Revenue topped out in 2008 at $538 million, by which point the shares were worth almost nothing and the business lost $123 million for the year, including a $100 million write-down of goodwill. Headcount peaked in the same year at 3,477 people, most of them in manufacturing.

Then it went backwards for eight years. By the end of 2016, the last full year it existed, MRV booked $88.2 million and employed 235 people. The European resellers had been sold one by one. What was left was a single-segment company making optical transport boxes called OptiDriver, Carrier Ethernet demarcation units called OptiSwitch, and the Pro-Vision software that managed them. Those boxes sit at the exact point where a telco's fiber reaches an office building, which is useful, unglamorous work.

~ the bubble arithmetic ~

Luminent never got spun off. MRV had promised to distribute the shares to its own holders by November 2001; instead, in September of that year it announced it would buy the public minority back, and closed the deal in December at 0.43 MRV shares per Luminent share. It issued stock worth $16.9 million to retire the 12 million shares the market had paid $144 million for thirteen months earlier, and booked a $9.9 million gain on the transaction.

The slower disaster was the stock options. In June 2008 MRV disclosed that a board committee was reviewing every grant it had made since February 1994, and found that grant dates and prices on many pre-2004 awards had been picked after the fact without the corresponding expense being recorded. Nasdaq suspended trading in June 2009 and delisted the company that August. The restated annual report landed on 8 October 2009, seven months late, telling investors that four years of previously filed financial statements should no longer be relied upon. The SEC closed its own investigation that August without recommending enforcement.

What followed was the activist endgame, and it was unusually frank about what the operating business was worth. In August 2011 a group of funds moved to shrink the board and force the return of roughly $120 million in cash. The CEO and chairman resigned that October. Between November 2011 and December 2012 MRV paid out about $133 million in three special dividends and sold off the European integration subsidiaries one country at a time. In December 2012 it did a one-for-twenty reverse split that turned 152.8 million shares into 7.6 million. Five years later the whole company fetched $69 million. It had already given back nearly twice its own eventual price.

~ one holder of record ~

ADVA Optical Networking signed the merger agreement on 2 July 2017 and opened a tender offer at $10.00 a share on the 17th. The offer expired at midnight Eastern on 11 August without being extended, with 5,296,053 shares tendered, about 79 percent of the stock. On 14 August, under section 251(h) of Delaware law, the merger subsidiary was folded into MRV, and MRV passed into the ownership of a German company registered in the Jena commercial register. Nasdaq filed to strike it the same day.

Ten days later MRV filed its Form 15, the one-page notice a company sends when it stops being a public company at all. The box asking for the approximate number of holders of record reads "one (1) holder". It was signed by Ulrich Dopfer, an ADVA finance executive, as president of a business his own employer had bought that month. Sixteen years earlier the same box had read 3,384.

The hardware is still being sold, under other names. MRV's OptiSwitch OS-V boxes ship today as Adtran FSP 150-XG300 units, and an old training syllabus still carries the translation in brackets: FSP150-XG304, former OS-V8. The Pro-Vision software was replaced by something called Mosaic. mrv.com does not resolve. The company's own website outlived the acquisition by about four months and went dark that December.

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