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MRV Communications, Inc. Message Board

  • normboyz normboyz May 11, 2005 2:16 PM Flag

    the macro picture

    Oil inventories build once again this AM, yet the price for a barrel of oil stubbornly remains above $50, even as overall inventories are nearly 10% higher than the same time last year.

    Wonder if the hedge funds are doing the following trade: speculatively bidding/propping up oil and shorting the rest of the market, which can't go anywhere but down as long as oil stays above $50 and casts the ghost of stagflation.

    Wouldn't surprise me if this bet was on on a very large scale. Best way to counter it would be to do a surprise announcement that a portion of the SPR willl be released. No one would expect it and it would absolutely crush the speculative forces propping oil and knocking down the overall market. It would also force these speculators to rethink their aggresive strategy going forward.

    That would really get this market moving again to a more healthy footing. Right now the stagflation fears are controlling this market.

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    • Mahler, yes, indeed, the contrarian parkendork lights are flashing big time right now.

      And actually it would have seemed completely hollow for management to have stuck their heads in the sand and accentuated the positives. I listened to the conference call and my impression is that management is telling like it is, which is what you them to do. Do they have knowledge about this ahead? Perhaps, maybe about 75% into the quarter, but what difference would it make? You would have gotten a warning 3-4 weeks early, followed by more of the same disappointing news on the earnings release and this Q guidance, which believe it or not may have given the shorts even more ammo to knock MRV's stock price down.

      And should we blame the MRV for the socialists in Europe, who are turning that part of the world into a 3rd world economy?

    • HI Norm....my point is that there were positives that could have been accented. Recall that Luminent supplies just 15% of their revenue, and the miss was just a few cents ( removing the 2 cents write off for tax purposes ). I agree that the report was not as bad as the market has decided it was, but clearly the cc was the major factor in the loss of value. Of course they were blind sided by Tellabs, but such facts were probably known a few weeks before the call. A pre-announcement along with a careful explanation of the situation would have been helpful.

      At any rate, the cc is history. Judging by the number of new bashers morphing here under parken's alias program the stock is poised for some good upward momentum. Ready for some good news for a change?

      m1

    • derp: Sorry, for many little players, u are correct. One can lease John Brown's pasture and start drilling within a few days (if everything is set up). But, those plays will not impact supply to any noticable extent.

      Large projects (those that can make an impact on supply) generally do take several years (deeper water, harsher climates, etc.) even if the company has a large incentive to bring production to market as soon as possible (as one who was in that business, I know). And, with current crude prices and falling reserves, the company I was involved with is trying to bring projects to commercialization as soon as possible. To think that most companies are withholding crude from the market with current prices and the current supply/demand picture makes no economic sense - and the holder of those views is not well informed.

      But, of course, u should know all this as well...even if u are a little player...

    • Management in Tel Aviv corrupt bunch of stock price manipulators, "My Retirement Vehicle", my ass....MRVC not invetstable/bk with a democratic american president. MRVC the Isreali company will be stronger than ever, once american bagholders shed.

    • <<<It can>>>> often take 5-10 years from leasing a property to actual production.<<<

      It can take what it takes---as someone that leases mineral rights I will tell you its up to the discretion of the leasee----whether its a matter of a few months or years to start proving out the feild and at what rate the producer wants the crude to get to market. In short just another way to manipulate the markets. I have seen the big players lease big tracks of drilling rights to keep the smaller players from producing them.
      Like all things its a game-----as i have said before why make more widgets when the profit margin on what your makeing keeps going though the roof----and for backup you have the legislature in your pocket.
      Where have all those---big-time---oil comapny profits come from the last few quarters ????? their high cost of discovery???? their dwindling reserves ???? their lack of refining??? Noooo, its from the price increase they demand for their widgets while controling the rate at which they come to markets.
      oil trusts of the twenty first century---and the great (in his own mind) boondoggle pickens-----the more things change the more they stay the same. pretty simple stuff to divet the great tax cuts into the pockets of ye-olde oil patch buds. goooo raiders--;>)

    • norm: Having been in the business (but not claiming to be an "expert", it has been my view that the supply side is pretty well known (at least for the next 5 years - after that it is a little less known but still fairly well known for 10 years). It can often take 5-10 years from leasing a property to actual production.

      The less known part of the equation is demand - it can change within several months - and within a day if from the point of view of an analyst or the market.

    • Retiredguru,

      I don't necessarily subscribe to the view that there isn't enough oil supply out there and that new oil supply will not be forthcoming any time soon.

      I know there are many expert opinions out there who would disagree, in fact, the consensus. But I heard a lot of other so-called experts predicting good times for other industries as far as the eye could see.

      Indeed, I specifically recall John Chambers at CSCO predicting five years ago that sales could continue to grow at 50% annually for the company for the next ten years due to strong and growing demand from Asia. Sound familiar?

      Predictions based on trend following has lost many persons many $'s.

    • Mahler, your perception of the conference call is much too jaded IMO. It wasn't the best performance, but certainly the facts are what they are: MRV got blindsided by TLAB and a softer European market and had to warn.

      The stock would have taken a beating no matter what, especially in the current environment.

      I'm sure if they had a blow out quarter but did not do the best job explaining it, no one would be complaining because the stock price would still go up.

    • Hey guys, looks like the price of oil dropped almost $2/bbl and gold lost about $5/oz. Maybe a combination of things going on including a stronger dollar and slowing economy(demand)...

    • "Actually, it was riskier to tap the SPR back when Clinton did it."

      Actually, I think not. True, maybe not as many measures were in place pre 9-11 but the big difference was that then, the world had more crude supply that demand. Today, it is barely in balance.

      "I think if my strategy was implemented Oil would drop back to the $30's and stay there."

      Could be, but do you not believe that supply/demand is essentially in balance? Do you not agree that tapping the spr would only be temporary (if, in fact the addition is even meaningful rather than just an emotional lift)? And, unless a recession, why do you think demand will fall? In other words, without a recession, demand will most probably continue to increase and, with supply about at maximum now, why would prices stay at $30 (even if speculators are crushed - which would be fine with me)?

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