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Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Ladies and gentlemen, thank you very much for standing by, and welcome to the MRV Communications first quarter and year ending 2008 financial results call. During today's presentation all parties will be in the listen-only mode.
Following the presentation the conference will be open for questions and answers. (OPERATOR INSTRUCTIONS)
I would now like to turn the conference over to Anne-Marie Frisch with Investor Relations. Please go ahead, Ma'am.
ANNE-MARIE FRISCH, INVESTOR RELATIONS, MRV COMMUNICATIONS, INC.: Thank you, Mike.
Good afternoon, everyone and thank you for joining us today to discuss MRV's 2008 first-quarter financial results.
I am joined today by Noam Lotan, President and CEO, and Guy Avidan, CFO of MRV Communications.
Earlier this afternoon, the company issued a press release reporting its first quarter, for the first quarter ended March 31, 2008. A financial presentation designed to guide participants through the call is available.
The press release along with the presentation can both be viewed from the investor relations section of MRV's website at ir.mrv.com. A taped replay of this call that can be accessed by phone will be available approximately two hours after the call's conclusion and will be available for one week.
The dial-in numbers and pass code are available on our website and will be provided at the conclusion of today's call. This call is also being webcasted live and a web replay will also be available. Both may be accessed at ir.mrv.com.
We would like to remind you that during the course of today's call, MRV's management may make forward-looking statements, including financial projections, statements as to the plans and objectives of management for future operations and statements as to the company's future economic performance, finance condition or result of operations.
They forward-looking statements are not historical facts but rather are based on management's current expectations and beliefs and are based on information currently available to us.
Words such as may, will, expect, intends, plans, believes, targets, estimates, forecasts and variations of these words are intended to identify forward-looking statements. By discussing our current perception of our market and making these forward-looking statements, we are not undertaking an obligation to provide updates in the future.
MRV's actual results may deliver materially from those projected in these forward-looking statements and no one should assume that at any future date today's forward-looking statements will then project the estimates of management.
Any future product future or related specification that may be referenced in today's call are for information purposes only and are not commitments to deliver any technology or enhancements. MRV reserves the right to modify future product plans at any time.
These forward-looking statements portion of our press release issued today, as well as the risk factor sections of our 10-Ks and 10-Qs filed with the SEC disclose risks that could cause differences.
Additional risks not known to us from our business generally may also impair our business by conditions or results of operations or would prevent us from realizing our current expectations.
I'd now like to turn the call over to Noam Lotan, MRV's President and CEO. Noam.
NOAM LOTAN, PRESIDENT, CEO, MRV COMMUNICATIONS, INC.: Thank you, Anne-Marie and good afternoon, everyone and thank you for joining us today.
I'm very pleased to report that MRV had a very solid first quarter.
It was the highest revenue first quarter in our history.
Revenue for the quarter was a record $126 million, a 40% increase over Q1 of last year.
2008 is the 20th anniversary year for MRV and this was a great start to the year. We experienced strong revenue growth in network equipment and in optical components.
Both related to deployments of regional, metro and networks, domestic and internationally. These networks provide the infrastructure required to deliver broadband connectivity and tripleplay services to residential and business customers. We are pleased with our growth and we expect that it will continue in Q2.
Our Network Equipment segment exhibited strength primarily in Metro Ethernet but also in the defense and aerospace division. Network Equipment grew 30% year over year. This growth coupled with good operational controls brought the network equipment segment to a near break even for the quarter. Really we're gaining market share in network equipment. Our growth rate is well above industry average and is driven by the strength of our product and demand for Metro Ethernet in both domestic and international markets.
As we expected, revenue from network integration declined sequentially from a seasonally strong fourth quarter. It was a bit softer than our expectations and posted a slight loss in Q1. These segments, which historically have almost always been profitable is expected to improve in Q2.
In our Optical Components segment of Source Photonics, we had a strong revenue growth from both our Legacy Optical Group and Integrated Fiberxon Group.
First quarter optical component revenue was 50 million, reflecting a year-over-year growth of 21% organically and 118% including Fiberxon. As you know, we are on file with the SEC for an IPO of Source Photonics. Therefore, information regarding Source Photonics is highly regulated by the process. For this reason, me and Margalit, the CEO of Source Photonics, will again not be on the call today. Instead Guy Avidan will give a brief overview of Source Photonics' Q1 results shortly.
Overall on a consolidated basis, I'm happy to see the business moving in the right direction.
There are two main factors that impacted our bottom line this quarter.
First, we have made great progress with the Fiberxon integration but it is still impacting earning …