8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

Current Report
Pursuant To Section 13 Or 15(D) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 15, 2007

MRV COMMUNICATIONS, INC.

(Name of registrant as specified in its charter)

DELAWARE	06-1340090
(State or other jurisdiction of	(I.R.S. Employer
Incorporation or organization)	Identification Number)
20415 Nordhoff Street
Chatsworth, Ca	91311
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (818) 773-0900

Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 — Results of Operations and Financial Condition.

On February 15, 2007, registrant made an earnings release announcing registrant’s 2006 fourth quarter and year-end unaudited financial results, the text of which is set forth in Exhibit 99.1 attached hereto. All information in the press release is presented as of February 15, 2007, and registrant does not assume any obligation to update such information in the future.

On February 15, 2007, as previously announced, registrant held a teleconference and audio web cast to discuss its 2006 fourth quarter and year-end unaudited financial results. The transcript of, and the Financial Highlights Overview and Highlights presented at, this teleconference and web cast is furnished herewith as Exhibit 99.2. All information in the transcript and web cast is presented as of February 15, 2007, and registrant does not assume any obligation to update such information in the future.

The information included in this Item 2.02, as well as Exhibits 99.1 and 99.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.

2

Item 8.01. Other Events.

On February 15, 2007, MRV publicly announced its unaudited statements of operations for the three and twelve months ended December 31, 2006 and its balance sheets at December 31, 2006 (unaudited) and December 31, 2005. These financial statements, which are included herein as part of Item 8.01 of this Report, follow on pages 4 and 5 of this Report.

[Remainder of this page intentionally left blank]

3

MRV Communications, Inc.

Statements of Operations

(In thousands, except per share data)

	Three Months Ended						Year Ended
	Dec. 31,			Dec. 31,			Dec. 31,			Dec. 31,
	2006			2005 (1)			2006			2005 (1)
	(Unaudited)
Revenue	$	102,646		$	91,169		$	356,489		$	283,698
Cost of goods sold		71,342			64,366			244,207			193,979
Gross profit		31,304			26,803			112,282			89,719
Gross margin		30	%		29	%		31	%		32	%
Operating costs and expenses:
Product development and engineering		7,204			7,100			28,187			26,051
Selling, general and administrative		24,181			20,259			87,539			72,402
Goodwill impairment		—			—			52			—
Total operating costs and expenses		31,385			27,359			115,778			98,453
Operating income (loss)		(81	)		(556	)		(3,496	)		(8,734	)
Interest expense		(932	)		(939	)		(3,540	)		(4,207	)
Other income, net		2,074			583			5,386			2,416
Income (loss) before taxes		1,061			(912	)		(1,650	)		(10,525	)
Provision for taxes		468			1,663			3,865			5,774
Net income (loss) (2)	$	593		$	(2,575	)	$	(5,515	)	$	(16,299	)
Net Income (loss) per share:
Basic	$	0.00		$	(0.02	)	$	(0.05	)	$	(0.16	)
Diluted	$	0.00		$	(0.02	)	$	(0.05	)	$	(0.16	)
Weighted average number of shares:
Basic		125,376			104,464			120,902			104,350
Diluted		128,551			104,464			120,902			104,350

(1)

Certain amounts in 2005 have been reclassified to conform to 2006 presentation.

(2)

Net income (loss) for the three months and year ended December 31, 2006 included share-based compensation expense related to employee stock options of $966,000 and $3.4 million, respectively, under SFAS 123(R). Net loss for the year ended December 31, 2005 included share-based compensation expense under SFAS 123 of $162,000. There was no share-based compensation expense for the three months ended December 31, 2005.

4

MRV Communications, Inc.

Balance Sheets

(In thousands)

	December 31,		December 31,
	2006		2005
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	91,722	$	67,984
Short-term marketable securities		25,864		—
Time deposits		821		1,475
Accounts receivable, net		95,244		92,466
Inventories		61,361		42,216
Deferred income taxes		895		873
Other current assets		13,607		7,828
Total current assets		289,514		212,842
Property and equipment, net		14,172		14,065
Goodwill		36,348		33,656
Deferred income taxes		1,460		136
Other assets		4,728		4,478
	$	346,222	$	265,177
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term obligations	$	26,289	$	30,378
Accounts payable		47,384		45,372
Accrued liabilities		29,704		29,272
Deferred revenue		7,624		6,076
Other current liabilities		5,926		2,230
Total current liabilities		116,927		113,328
Convertible notes		23,000		23,000
Other long-term liabilities		7,295		6,694
Minority interest		5,248		5,151
Commitments and contingencies
Stockholders’ equity		193,752		117,004
	$	346,222	$	265,177

5

Item 9.01 Financial Statements and Exhibits

Exhibit 99.1 Registrant’s earnings release of February 15, 2007 announcing registrant’s 2006 fourth quarter and year-end unaudited financial results (furnished pursuant to Item 2.02)

Exhibit 99.2 The transcript of, and the Financial Highlights Overview and Highlights, presented at, registrant’s teleconference of February 15, 2007 (furnished pursuant to Item 2.02).

6

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: February 20, 2007

MRV COMMUNICATIONS, INC.
By:	/s/ Noam Lotan
	Noam Lotan
	President and Chief Executive Officer

7

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

MRV ACHIEVES RECORD REVENUE IN FOURTH QUARTER AND FISCAL YEAR-END 2006

Q4 ’06 Total Revenue Exceeds $100 million
Optical Component Q4 ‘06 Revenue Increases 83% Year-over-Year and 13% Sequentially

CHATSWORTH, CA – February 15, 2007 – MRV COMMUNICATIONS, INC. (Nasdaq: MRVC), today reported its results for the fourth quarter and year-ended December 31, 2006. The Company’s results in accordance with US GAAP reflect the adoption on January 1, 2006 of SFAS 123(R) regarding the expensing of non-cash share-based compensation in 2006.

Revenue for the fourth quarter of 2006 was above guidance at $103 million, an increase of 13% over revenue of $91 million in the fourth quarter of 2005. GAAP net income for the fourth quarter of 2006 was $0.6 million or $0.00 per share, an improvement of $3.2 million when compared to a GAAP net loss of $2.6 million, or $(0.02) per share, for the fourth quarter of 2005. Non-GAAP net income for the fourth quarter of 2006, which excludes non-cash share-based compensation, was $1.6 million, or $0.01 per share, as compared with a non-GAAP net loss of $2.6 million, or $(0.02) per share, for the fourth quarter of 2005. Fourth quarter 2006 gross margin, operating income and net income were negatively impacted by a $0.9 million one time charge related to an inventory write-off for end-of-life products in the Company’s optical components business.

Revenues for the entire year of 2006 were $356 million, up 26%, compared to revenues of $284 million for 2005. GAAP net loss for 2006 was $5.5 million, or $(0.05) per share, compared to a net loss of $16.3 million, or $(0.16) per share for 2005. Non-GAAP net loss for 2006 was $2.0 million, or $(0.02) per share, compared to a non-GAAP net loss of $16.1 million, or $(0.15) per share, for 2005.

“Our results for the fourth quarter and entire year of 2006 represent the highest quarterly and annual revenues in company history and our second consecutive quarter of profitability,” commented Noam Lotan, President & CEO of MRV. “Revenue growth during the year was driven by our optical components business, which posted an 85% year-over-year increase in full year sales, and our internally developed networking equipment products which grew 17% on a full-year basis as a result of our expanded sales force. Looking forward, we are well positioned to take advantage of key emerging industry trends such as increased adoption of Metro Ethernet in North America and the need for carriers and MSOs to upgrade their networks in order to deliver triple play services to businesses and consumers in their homes.”

Continuing, Mr. Lotan stated, “During 2006, through our optical components division, we continued to benefit from fiber-to-the-home deployments by Verizon and other telecommunication carriers. We recently shipped our 1 millionth BPON triplexer, which was a significant milestone. As fiber-to-the-home

Exhibit 99.1-1

technology evolves, we remain the volume leader, having shipped over 100,000 GPON triplexers to date, primarily outside of the US, and we expect these shipments to accelerate as GPON deployments are launched in North America. To strengthen our position further in this market, we recently announced the proposed acquisition of Fiberxon, Inc. By combining Fiberxon with Luminent, our goal is to create one of the largest, most comprehensive manufacturers of optical transceivers for telecommunications networks. The integration of the two management teams is expected to strengthen the combined company. We expect that the combined company will have a strong fiber-to-the-home presence with EPON and GPON transceivers as well as add an established suite of products addressing the growing 10Gb/s transceivers market. The combined company is expected to address the objectives of our customers for a broader range of advanced solutions at competitive prices. It is also expected to increase customer diversification by giving us exposure to large Asian service providers.”

Kevin Rubin, Chief Financial Officer of MRV, commented, “We were pleased to record another quarter of strong revenue growth as well as our second consecutive quarter of profitability. During the fourth quarter, we also successfully reduced our inventories and generated strong positive cash flow. Looking ahead, we believe our business trends remain positive despite moving into the first quarter, which historically has been seasonally soft due to our high concentration of revenue in Europe.”

Operational Highlights

• The Company’s network equipment (internally developed) fourth quarter of 2006 revenue grew 19% year-over-year and continued to benefit from Metro Ethernet sales in North America. Sales of the Company’s Lambda Driver and Fiber Driver product lines were particularly strong in the fourth quarter of 2006 compared to the fourth quarter of 2005, improving 226% and 52%, respectively.

• The Company’s fourth quarter optical components revenue through Luminent, grew quarterly 83% year-over-year and 13% sequentially. Demand was primarily driven by sales of GPON and BPON ONT triplexer solutions.

• The Company’s network integration business in Europe enjoyed another strong quarter posting solid gross margins of 26%, a 270 basis points (2.7%) improvement from the third quarter of 2006.

First Quarter of 2007 Outlook

MRV currently estimates that revenues for the first quarter of 2007 will be in the range of $84 million to $87 million. Net loss per share is currently forecasted to be ($0.01) per share on a non-GAAP basis, which excludes the effect of SFAS No. 123(R) share-based compensation expense (which is forecasted to be approximately $0.01 per share). On a GAAP basis, net loss per share is currently forecasted to be approximately ($0.02) per share.

Exhibit 99.1-2

Other Information

MRV will host a conference call to discuss its fourth quarter and fiscal year-end of 2006 financial results today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). For parties in the United States and Canada, call 800-257-2101 to access the conference call. International parties can access the call at 303-262-2125. A financial presentation designed to guide participants through the call will also be available. MRV will offer its live audio broadcast of the conference call, along with the financial presentation, on the MRV Investor website at http://ir.mrv.com. For replay information, please visit the MRV Investor website.

Non-GAAP Financial Measures

MRV provides all financial information required in accordance with accounting principles generally accepted in the United States (“GAAP”). In the first quarter of 2006, MRV adopted Financial Accounting Standards Board Statement No. 123(R), which requires companies to recognize the compensation cost associated with share-based payments in their financial statements. As a result, the financial statements for the three months and year ended December 31, 2006 include the new share-based compensation expense of $966,000 and $3.4 million, respectively; however, comparable prior year periods are not required to be restated. Therefore, to supplement MRV’s financial statements presented in accordance with GAAP, MRV has provided non-GAAP financial information, which is adjusted to exclude all share-based compensation expense. In addition to excluding all share-based compensation expense, impairments of purchased intangible assets have also been excluded. MRV believes that the presentation of non-GAAP measures, when shown in conjunction with the corresponding GAAP measures, provides useful information to investors and management regarding financial and business trends relating to its financial condition and results of operations. MRV management uses the non-GAAP measures, in addition to the corresponding GAAP measures, in reviewing the financial results of its business.

Forward-Looking Statements

This press release contains statements regarding future financial and operating results of MRV, MRV’s expected revenues and net income (loss) for the first quarter of 2007 that ends on March 31, 2007, management’s belief that MRV is positioned to take advantage of key emerging industry trends and management’s expectations regarding those trends, the proposed transaction between MRV and Fiberxon, benefits and synergies of the proposed transaction and other statements about management’s future expectations, beliefs, goals, plans or prospects and those of the market segments in which MRV and Luminent are engaged that are based on management’s current expectations, estimates, forecasts and projections about MRV, Luminent and Fiberxon and the combined company, as well as MRV’s, Luminent’s and Fiberxon’s and the combined company’s future performance and the industries in which MRV, Luminent and Fiberxon operate and the combined company will operate, in addition to managements’ assumptions. These statements constitute forward- looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such as “expects,” “anticipates,” “envisions,” “estimates,” “targets,” “intends,” “plans,” “believes,” “seeks,” “should,” “forecasts,” “projects,” variations of such words and similar expressions are intended to identify such forward-looking statements which are not statements of historical facts. These forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to assess. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Actual results could differ materially because of the following factors, among others, which may cause revenues, gross margins and income (loss) to fall short of anticipated levels: vigorous competition relating to our entry into new markets or from our existing markets; market acceptance of new products; continued market acceptance of existing products and continued success in selling the products of other companies; product price discounts; the timing and amount of significant orders from customers; delays in product development and related product release schedules; obsolete inventory or product returns; warranty and other claims on products; technological shifts; the availability of competitive products at prices below MRV’s or Luminent’s prices; the continued ability to protect MRV’s and Luminent’s intellectual property rights; changes in product mix; maturing product life cycles; product sale terms and conditions; currency fluctuations; implementation of operating cost structures that align with revenue growth; the financial condition of MRV’s and Luminent’s customers and vendors; adverse results in litigation; the impact of legislative actions; higher insurance costs; potential new accounting pronouncements; the effects of terrorist activity and armed conflict; disruptions in general economic activity and changes in MRV’s or Luminent’s operations and security arrangements; the effects of travel restrictions and quarantines associated with major health problems, such as the Severe Acute Respiratory Syndrome, on general economic activity; decreases in corporate information technology spending or other changes in general economic conditions that affect demand for MRV’s or Luminent’s products.

Exhibit 99.1-3

For further information regarding risks and uncertainties associated with MRV’s and Luminent’s businesses, please refer to the “Management’s Discussion and Analysis of Results of Operations and Financial Condition” and “Risk Factors” sections of MRV’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting MRV’s investor relations department or at MRV’s investor relations website at http://ir.mrv.com.

All information in this release is as of February 14, 2007. MRV undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in MRV’s expectations.

About MRV Communications, Inc.

MRV Communications, Inc. (“MRV”) is a leading provider of network equipment and services and optical components. MRV’s networking business provides equipment used by commercial customers, governments and telecommunications service providers, and includes switches, routers, physical layer products and out-of-band management products as well as specialized networking products for aerospace, defense and other applications including voice and cellular communication. MRV’s optical components business provides optical communications components for metropolitan, access and Fiber-to-the-Premises applications, through its wholly owned subsidiary LuminentOIC, Inc. MRV markets and sells its products worldwide through a variety of channels, including a dedicated direct sales force, manufacturers’ representatives, value-added-resellers, distributors and systems integrators. MRV also has operations in Europe that provide network system design, integration and distribution services that include products manufactured by third-party vendors, as well as internally developed and manufactured products. Publicly traded since 1992, MRV is listed on the NASDAQ Global Market under the symbol MRVC. For more information about MRV and its products, please call (818) 773-0900 or visit our websites at www.mrv.com and www.luminentoic.com.

Investor Relations	The Blueshirt Group for MRV
MRV Communications, Inc.	Chris Danne, Rakesh Mehta
Investor Relations	(415) 217-7722
(818) 886-MRVC (6782)	chris@blueshirtgroup.com
ir@mrv.com	rakesh@blueshirtgroup.com

Exhibit 99.1-4

MRV Communications, Inc.

Statements of Operations

(In thousands, except per share data)

	Three Months Ended						Year Ended
	Dec. 31,			Dec. 31,			Dec. 31,			Dec. 31,
	2006			2005 (1)			2006			2005 (1)
	(Unaudited)
Revenue	$	102,646		$	91,169		$	356,489		$	283,698
Cost of goods sold		71,342			64,366			244,207			193,979
Gross profit		31,304			26,803			112,282			89,719
Gross margin		30	%		29	%		31	%		32	%
Operating costs and expenses:
Product development and engineering		7,204			7,100			28,187			26,051
Selling, general and administrative		24,181			20,259			87,539			72,402
Goodwill impairment		—			—			52			—
Total operating costs and expenses		31,385			27,359			115,778			98,453
Operating income (loss)		(81	)		(556	)		(3,496	)		(8,734	)
Interest expense		(932	)		(939	)		(3,540	)		(4,207	)
Other income, net		2,074			583			5,386			2,416
Income (loss) before taxes		1,061			(912	)		(1,650	)		(10,525	)
Provision for taxes		468			1,663			3,865			5,774
Net income (loss) (2)	$	593		$	(2,575	)	$	(5,515	)	$	(16,299	)
Net Income (loss) per share:
Basic	$	0.00		$	(0.02	)	$	(0.05	)	$	(0.16	)
Diluted	$	0.00		$	(0.02	)	$	(0.05	)	$	(0.16	)
Weighted average number of shares:
Basic		125,376			104,464			120,902			104,350
Diluted		128,551			104,464			120,902			104,350

(1)

Certain amounts in 2005 have been reclassified to conform to 2006 presentation.

(2)

Net income (loss) for the three months and year ended December 31, 2006 included share-based compensation expense related to employee stock options of $966,000 and $3.4 million, respectively, under SFAS 123(R). Net loss for the year ended December 31, 2005 included share-based compensation expense under SFAS 123 of $162,000. There was no share-based compensation expense for the three months ended December 31, 2005.

Exhibit 99.1-5

MRV Communications, Inc.

Non-GAAP Statements of Operations

(In thousands, except per share data)

	Three Months Ended						Year Ended
	Dec. 31,			Dec. 31,			Dec. 31,			Dec. 31,
	2006			2005 (1)			2006			2005 (1)
	(Unaudited)
Revenue	$	102,646		$	91,169		$	356,489		$	283,698
Cost of goods sold		71,262			64,366			243,896			193,979
Gross profit		31,384			26,803			112,593			89,719
Gross margin		31	%		29	%		32	%		32	%
Operating costs and expenses:
Product development and engineering		7,008			7,100			27,412			26,051
Selling, general and administrative		23,491			20,259			85,183			72,240
Total operating costs and expenses		30,499			27,359			112,595			98,291
Operating income (loss)		885			(556	)		(2	)		(8,572	)
Interest expense		(932	)		(939	)		(3,540	)		(4,207	)
Other income, net		2,074			583			5,386			2,416
Income (loss) before taxes		2,027			(912	)		1,844			(10,363	)
Provision for taxes		468			1,663			3,865			5,774
Net income (loss)	$	1,559		$	(2,575	)	$	(2,021	)	$	(16,137	)
Net Income (loss) per share:
Basic	$	0.01		$	(0.02	)	$	(0.02	)	$	(0.15	)
Diluted	$	0.01		$	(0.02	)	$	(0.02	)	$	(0.15	)
Weighted average number of shares:
Basic		125,376			104,464			120,902			104,350
Diluted		128,551			104,464			120,902			104,350

(1) Certain amounts in 2005 have been reclassified to conform to 2006 presentation.

Exhibit 99.1-6

MRV Communications, Inc.

Reconciliation of GAAP to Non-GAAP Net Income (Loss)

(In thousands, except per share data)

	Three Months Ended					Year Ended
	Dec. 31,		Dec. 31,			Dec. 31,			Dec. 31,
	2006		2005			2006			2005
	(Unaudited)
GAAP net income (loss)	$	593	$	(2,575	)	$	(5,515	)	$	(16,299	)
Share-based compensation expense (SFAS 123(R) expense) included in Cost of goods sold		80		—			311			—
Share-based compensation expense (SFAS 123(R) expense) included in Product development and engineering		196		—			775			—
Share-based compensation expense (SFAS 123(R) expense) included in Selling, general and administrative		690		—			2,356			162	(1)
Goodwill impairment		—		—			52			—
Non-GAAP net income (loss)	$	1,559	$	(2,575	)	$	(2,021	)	$	(16,137	)
Net Income (loss) per share:
GAAP income (loss) per share — basic and diluted	$	0.00	$	(0.02	)	$	(0.05	)	$	(0.16	)
Non-GAAP income (loss) per share — basic and diluted	$	0.01	$	(0.02	)	$	(0.02	)	$	(0.15	)
Weighted average number of shares:
Basic		125,376		104,464			120,902			104,350
Diluted		128,551		104,464			120,902			104,350

(1) Net loss for the year ended December 31, 2005 included share-based compensation expense under SFAS 123.

Exhibit 99.1-7

MRV Communications, Inc.

Balance Sheets

(In thousands)

	December 31,		December 31,
	2006		2005
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	91,722	$	67,984
Short-term marketable securities		25,864		—
Time deposits		821		1,475
Accounts receivable, net		95,244		92,466
Inventories		61,361		42,216
Deferred income taxes		895		873
Other current assets		13,607		7,828
Total current assets		289,514		212,842
Property and equipment, net		14,172		14,065
Goodwill		36,348		33,656
Deferred income taxes		1,460		136
Other assets		4,728		4,478
	$	346,222	$	265,177
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term obligations	$	26,289	$	30,378
Accounts payable		47,384		45,372
Accrued liabilities		29,704		29,272
Deferred revenue		7,624		6,076
Other current liabilities		5,926		2,230
Total current liabilities		116,927		113,328
Convertible notes		23,000		23,000
Other long-term liabilities		7,295		6,694
Minority interest		5,248		5,151
Commitments and contingencies
Stockholders’ equity		193,752		117,004
	$	346,222	$	265,177

Exhibit 99.1-8

EX-99.2

Exhibit 99.2

CORPORATE PARTICIPANTS

Anne-Marie Frisch
MRV Communications — IR

Noam Lotan
MRV Communications — President, CEO

Kevin Rubin
MRV Communications — CFO

Exhibit 99.2-1

Near Margalit
Luminent — CEO

CONFERENCE CALL PARTICIPANTS

John Harmon
Needham and Company — Analyst

Dave Kang
Roth Capital — Analyst

Tim Quinless
Mayo Capital — Analyst

John Anthony
Cowen and Company — Analyst

PRESENTATION

Operator

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the fourth quarter and fiscal year-end 2006 financial results conference call. [OPERATOR INSTRUCTIONS] I would now like to turn the call over to Anne-Marie Frisch, from the Investor Relations department. Please go ahead.

Anne-Marie Frisch - MRV Communications — IR

Thank you, Heidi. Thank you for joining us today to discuss MRV’s fourth quarter and full-year 2006 financial results. I am joined today by Noam Lotan, President and CEO, and Kevin Rubin, CFO of MRV Communications. As well as Near Margalit, CEO of Luminent.

Earlier this afternoon, the company issued a press release reporting its fourth quarter and full year 2006 financial results. A financial presentation designed to guide participants through the call will also be available. The press release and presentation can both be viewed from the Investor Relations section of MRV’s website at ir.mrv.com.

For reference, we have arranged for a tape replay of this call which can be accessed by phone. The replay will take effect approximately two hours after the call’s conclusion and will be available for one week. The dial-in numbers and access code is available in our press release and on our website. This call is also being webcast live with a web replay available. These may both be found at ir.mrv.com.

We would like to remind you, that during the course of this conference 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, financial conditions, or result of operations. These forward looking statements are not historical facts but rather are based on MRV’s current expectations and beliefs and are based on information currently available to us. Words such as may, will, expect, intends, plans, beliefs, targets, estimates and variations of these words are intended to identify forward-looking statements. By discussing our current perception of the market and making these forward looking statements we are not undertaking an obligation to provide updates in the future.

MRV’s actual results may differ materially from those projected in these forward-looking statements and no one should assume at a later date that these comments from today are still valid. Any future product feature 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 enhancement. MRV reserves the right to modify future product plans at any time.

These forward-looking statements, a portion of our press release issued today, as well as the risk factors section of our 10-Ks and 10-Qs filed with the SEC disclose risks that could cause these differences. In our press release of January 26th, 2007 we announced MRV’s intention of taking Luminent public sometime later this year or next.

That announcement and this statement does not constitute any offer of security for sale. Because of SEC rules and regulations governing the going public process we will neither discuss nor answer any questions on this subject. We hope you understand and we would appreciate it if in your questions you did not implicate that subject.

Finally, unless we specifically note otherwise, we are discussing all numbers on a non-GAAP basis prior to non-cash charges for the impact of share-based compensation as required under the statement of financial accounting standards number 123R which we we adopted effective January 1, 2006.

This quarter non-cash share based compensation charges totaled $966 million. A full — thousand. Excuse me.

Exhibit 99.2-2

A full reconciliation of the non-GAAP measures covered in this call to the most comparable GAAP measures is available in our press release issued after the market closed. I would now like to turn the call over to Noam Lotan MRV’s President and CEO. Noam.

Noam Lotan - MRV Communications — President, CEO

Well thank you, Anne-Marie. Good afternoon everyone and thanks for joining us today.

Our fourth quarter and year end results demonstrate strong performance from both Luminent and from our networking group. Specifically Q4 results represent the highest quarterly revenue in MRV’s history and our second consecutive quarter of profitability. Our year over year results are highlighted by significant revenue and increased market share in optical components and growth in our networking segments. Coupled with revenue growth with significant improvements of the bottom line.

Here are some of our major accomplishments of 2006. We increased revenue by 26% from $284 million in ‘05 to $356 million in ‘06. Growth for the year was driven by all our business segments.

We reached profitability earlier than we had guided. We turned around and improved the loss of $16 million in ‘05, the loss of $2 million in ‘06 with a profitable second half.

We strengthened MRV’s balance sheet by adding $70 million to finance growth and our continued innovation throughout the year resulted in several best of breed product introductions in optical components and network equipment.

Our annual results are evidence that we are executing well on the goals we set out last year. We reached profitability by Q4 and to maintain leadership and fully capitalize on part of the home deployment and to expand our high margin network equipment business especially in North America.

Looking forward MRV is well positioned to take advantage of key emerging industry trends such as the increased adoption Metro Ethernet in North America and the need for carriers and MSOs to upgrade their networks in order to deliver triple play services to businesses and consumers alike.

Now with respect to Luminent, in Q-4 Luminent continued to grow rapidly, posting 83% year over year growth and strong 13% sequential growth. Out pacing the industry. On the year over year basis Luminent posted an impressive 85% revenue growth. Also for the full year Luminent’s improved gross margin from 11% in ‘05 to 19% in ‘06.

Revenue growth continues to be driven by demand for ONT Triplexers being used in Verizon’s fiber to the home roll-out. According to Verizon, by year end, [Inaudible] internet rose to 700,000 customers which was about double their installed base of six months ago. This installed base is set to more than double again in 07.

Subscribers [based to file QV] grew by close to 90,000 users in Q4 for a year end total of 217 subscribers. As suppliers of the key components to the product ONT we are most proud of the enthusiastic user’s experience witnessed by consumer reports and by the direct treatment that we receive from users. We are very impressed with the acceptance of Fios as a very successful and widely adopted triple play solution. Recently, we announced a definitive agreement to acquire Fiberxon and combine both Luminent and Fiberxon. Our goal is to create one of the largest, most comprehensive manufacturers of optical transceivers for telecommunication networks.

This acquisition significantly strengthened our fiber to the home presence and adds an established suite of products. Addressing the high growth ten Gigabit transceiver market.

In large scale telecom deployment scale does matter. The acquisition will allow us to provide tier one customers with a broad range of advanced solutions at competitive prices as well as leverage operation efficiencies over time. It will also increase customer diversification, giving us exposure to large Asian service providers. Later on this call Near will go into the strategic importance of this proposed acquisition in more details.

I just want to add that this transaction will bring together two very strong management teams, which by working together, shoulder to shoulder, would provide great strength to the combined company and make their mark on the industry.

Exhibit 99.2-3

Now to the networking group. Q4 was also an excellent quarter for our networking group. Where we grew revenue 14% sequentially. Our Q4 network equipment sales which are composed of our home grown MRV product were up 19% year over year driven by continuing demands for our Metro Ethernet and optical transport solutions.

We showed good strength from sells to emerging carriers such as, Limelight and Expedia and many others. Our network integration business in Europe had another solid quarter posting 26% gross margin. This is a 270 basis point improvement from last quarter . This business continues to perform well and consistently produces good operating income for MRV.

I’m optimistic about the future, especially the Metro Ethernet opportunity. A recent survey indicates that Metro Ethernet equipment market is expected to grow from just under $5 billion in ‘05 to over $15 billion in ‘09. This would represent a compounded annual growth rate of over 30%.

Other growth drivers for MRV include Beta centers and lab infrastructure. Including hosting for location centers in [Inaudible].

Further growth opportunities lie with mobile operators around the world We have had multiple wins in this segment. Applications range from fiber optic service extension for traffic backhold to WDM applications to fiber optic network monitoring.

Government applications are also a significant growth opportunity for us. Earlier this week we announced completion of conformant testing with a joint interoperability test command, [Gtic] which 35 interoperability for all networking product to be used by agencies of the department of defense. We believe that we have outstanding solutions for this area, especially in optical transport and in secure out of band management that will deliver value to the defense department both in terms of price and performance.

In terms of geography, we see further growth opportunities in North America, Japan, Korea, and certain European countries, as well as in South America. Going forward I am excited about where MRV is heading. We will continue to drive for better market share network equipment especially in areas where we have best of breed solutions, a healthy growth margin, and an impressive track record.

Kevin will now provide details on our financial results, following Kevin, Near will provide an update on our optical component business, then we will take your questions. At this time I would like to turn over to Kevin.

Kevin Rubin - MRV Communications — CFO

Thank you, Noam. As Noam mentioned 2006 was a milestone year for MRV.

At the beginning of 2006 we set forth three main strategic goals. Achieve quarterly profitability by the fourth quarter of 2006. Maintain and expand our dominant leadership position in fiber to the home deployment and expand our sales penetration of our network equipment, specifically North America.

We accomplished each of these goals this year. We reported two consecutive quarters of profitability, maintained our dominant leadership position by supplying Triplexer Transceivers to Alcatel, Tellab, and Motorola, as well as other equipment vendors which we believe represents more than 95% market share and grew our full year consolidated North American revenue nearly 60%.

Now, I would like to make a few remarks regarding our announced acquisition of Fiberxon on January 26, 2007. Near will provide additional insight into the strategic value the combination of Luminent and Fiberxon creates in his prepared remarks.

MRV has agreed to pay approximately $131 million to acquire Fiberxon. The purchase price breaks down as follows: . Approximately $17 million of cash, the issuance of approximately 21 million shares of common stock including shares of common stock underlying the assumption of Fiberxon options and an obligation to pay an additional amount of approximately $32 million in cash and/or stock within 18 months of the close depending on certain conditions. The cash to be paid in this transaction is expected to be paid with our cash on hand.

Now I will discuss our operating results. We are pleased to report record quarterly and annual revenue as well as profitability for the second consecutive quarter. On a consolidated basis, this quarter, we reported net income of $0.01 per share in line with expectations. This compares to a net loss of $0.02 in the year ago period and is in line of net income of $0.01 last quarter.

Exhibit 99.2-4

I would like to point out we did record a $900,000 one time charge relating to inventory write off for end of life and discontinued products in our optical components business. Excluding this one time charge our net income for the fourth quarter would have been $0.02 per share.

On an operating basis our networking business achieved operating income of $1.7 million, and excluding the one time inventory charge of our optical components business achieved operating income of $700,000.

Revenues for the full year of 2006 were $356 million up a very strong 26% compared to revenues of $284 million for the full year of 2005. We reported a net loss of $0.02 per share for the year which is a significant improvement over net loss of $0.15 per share for the full year of ‘05.

These results demonstrate the leverage capabilities of our financial model. We were able to grow revenue and gross profit over our fixed cost base. Even with the investment made earlier this year in our network equipment direct sales force we achieved profitability for the second half of the year. Going into 2007 we expect further leverage on our cost structure.

For the fourth quarter we reported record revenue of $103 million, an increase of 13% compared to $91 million in the same period last year. Sequentially revenues increased 15% from $90 million in the preceding third quarter. Currency did not have a meaningful impact on our results this quarter compared to last quarter.

Our networking segment revenue, excuse me, our networking segment which includes our network equipment and our network integration revenue, reported fourth quarter revenue of $78 million, up 14% sequentially, compared to $69 million in the preceding quarter and flat compared to revenue in the fourth quarter in 2005. While the networking segment was flat year over year our network equipment or internally developed products grew at a healthy 19% in the fourth quarter compared to the same period last year. We have strategically focused our revenue growth in this area.

Our fourth quarter network equipment revenue was $28 million compared to $24 million for the fourth quarter of 2005. On a sequential basis our network equipment revenue was relatively flat decreasing 2% compared to a very strong third quarter which as we discussed on the last call benefited from a multi-million dollar order from a large Japanese carrier.

Geographically our network equipment product sales grew 17% in North America and 20% in Europe year over year. Driven by shipments of our Lambda Driver and Fiber Driver product lines which together grew 25% year over year.

Our network integration reported revenue of $50 million for the fourth quarter up 24% sequentially. Compared to revenue of $40 million in the preceding quarter. Revenue was down 7.5% compared to $54 million in the fourth quarter of 2005. However as you may recall the fourth quarter of last year was benefited by large sales of lower margin third party equipment in our Italian operations. Our revenues this quarter were at more normalized levels.

In the current quarter our network integration division improved profitability posting strong operating margins of 8% a significant improvement over 6% in the prior quarter and 5% in the year ago period. This division continues to generate solid profit and cash flow for the company.

In our optical component segment ,which includes approximately $1.3 million of revenue sold into the networking segment, we reported revenue of $26 million, up 13% sequentially compared to $23 million last quarter and reflecting year over year growth of 83% compared to revenue of $14 million in the fourth quarter of 2005.

Revenue growth was driven by sales of our Triplexer Transceiver for the Verizon Fios project and our next generation Triplexer Transceiver for GPON which have been mostly deployed outside the U.S. thus far.

From a geographical perspective, Europe remained our strongest region accounting for approximately 63% of revenue compared to 59% last quarter. While revenue from North America contributed 31%, compared to 32% last quarter on an absolute dollar basis North American revenue grew nearly $4 million sequentially. Our strong performance in Japan last quarter resulted in our revenue in Asia Pacific decreasing to 6% of revenue this quarter compared to 9% last quarter.

This quarter we reported 31% gross margin. Our gross margin would have been 32% adjusted for the one time inventory charge in our optical components division. This compares to 32% in the preceding third quarter and 29% in the year ago period.

Exhibit 99.2-5

Gross margin realized from revenue of our network equipment was 51% down slightly compared to prior quarter but up compared to 50% from the same period in the year ago period. Network integration gross margin improved to 26% which is at the higher end of the historical mid to high 20% gross margin for this division.

Our gross margin in our optical components division was 17% including the one time inventory write off of $900,000. Excluding this one time write off our gross margin from our optical components business was 20%, down 110 basis points sequentially compared to the prior quarter. This sequential drop was the result of product mix as our fiber to the home product sales were a more significant percentage of our revenue.

Our total operating costs and expenses were $30 million or 30% of revenue in the fourth quarter, which is in line with the fourth quarter of last year and an improvement of 31% of revenue in the preceding third quarter. Looking at the first quarter of 2007 we expect our operating costs and expenses to be in the range of 28 to $29 million.

I would now like to discuss our net cash flow and working capital results. At the fourth quarter end we generated strong cash flow with total cash equivalents, time deposits, short and long-term investments increasing $1.6 million, to $118.4 million compared to $118.8 million at the end of the preceding third quarter. We spent approximately $1.6 million on CapEx this quarter.

Our working capital improved to $173 million at year end representing an improvement both sequentially and year over year. Although accounts receivable increased to $95 million, our day sales outstanding improved to 84 days down from 89 days last quarter. As we have discussed in the past, our DSOs are effected by the longer collection cycles typical in certain European markets in which we do business.

We were also successful in reducing our inventories this quarter by 13% to just over $61 million. Consequently our inventory in turns improved to 4.6 times on an annualized basis.

Looking forward, we are optimistic with our ability to perform well again in 2007. We believe carrier and service provider spending will remain strong in ‘07 and we see further opportunity for growth especially in North America. However, we have traditionally experienced normal seasonality in the first quarter of the year relative to the prior fourth quarter largely as a result of our European presence.

Also in our fiber optic division we saw some softness at Verizon exiting 2006 relative to our customer purchasing patterns. However this softness was short lived as we have seen some acceleration, recent acceleration recently in orders. Currently we do not expect to be able to meet all of the reaccelerated Q1 demand and expect some of these orders to roll into Q2.

Given these factors we currently forecast our Q1 total revenue to be in the range of $84 to $87 million representing year over year growth of approximately 9%. And revenue from our optical components business is currently forecasted to be in the range of $21 to $23 million.

On the bottom line we are currently forecasted to be at a $0.01 loss for the first quarter on a non-GAAP basis, which excludes share based compensation expense, expected to be approximately $0.01 per share. On a GAAP basis we currently expect to report a net loss of $0.02 per share.

I would now like to turn the call over to Near Margalit, CEO of Luminent.

Near Margalit - Luminent — CEO

Thank you, Kevin.

Today I’d like to spend some time both on our current financial results and outlooks, as well as the long-term vision of the company as it combines with Fiberxon. Revenue for the quarter came in at $26 million, a 13% sequential increase over the prior quarter of $23 million.

As Kevin mentioned our gross margin and profitability numbers were negatively impacted by a $900,000 write down of material associated with end of life products produced in the United States related to Legacy, Fiber to the Curb, and Fiber to the Home modules. The demand for the Legacy modules has all but ended as we shipped $1 million of these Legacy components, as a last time buy in Q4.

It does not make sense to continue to keep the manufacturing capabilities of these modules in the United States. We need to take a full reserve against inventories associated with these products. As we complete the ramp down of the U.S. manufacturing, there are no more Legacy products with net inventory on the balance sheet that are unique to the U.S. manufacturing facility.

Exhibit 99.2-6

With that said our operating loss for the quarter was $240,000 excluding share biz compensation. Our operating profit for the quarter would have been $1.5 million excluding depreciation of $800,000 and the $900,000 material reserve.

Gross margin for the quarter was 17%. As mentioned earlier the end of life product write off of $900,000 impacted gross margin negatively. Excluding this effect gross margin would have been 20%.

We are seeing some negative impact from the ramp of GPON sales on gross margins. We are aggressively, however, and actively cost reducing the GPON product line to bring the gross margins on the GPON product to the corporate average.

Operating expenses, excluding stock based compensation of $200,000 were $4.6 million or 17% of revenue. Excluding the Fiberxon combination we see operating expenses approximately flat at the current level through most of 2007. For the full year 2006, we did $93 million in revenue and had a net income of more than $2 million excluding $1 million of share based compensation.

Through 2006 we maintain a dominant market share in the Verizon Fios project at all the major OEMs. At the end of Q4, Luminent had shipped over 1.3 million BPON Triplexers, for a total revenue of $91 million from inception. The large majority of these BPON triplexers have gone to satisfy the Verizon Fios project.

We expect also to ship 90,000 units of GPON in Q1. So GPON is very quickly becoming a very significant portion of the revenue and we continue to believe we are the clear volume leader in GPON.

Our understanding is the majority of the GPON product is going to international carriers deploying fiber to the homes, access infrastructures. The diversification of the FTTP revenue to other carriers, aside of Verizon, is a major goal of the FTTP team.

Metro transceiver revenue came in at only $4 million a significant drop from previous quarters as two major customers had major inventory corrections due to push out and specific projects. As I will talk about in a minute the combination with Fiberxon will significantly help diversify the revenue stream to many more customers mitigating the lumpiness associated with carrier deployments.

Looking forward to Q1 we are anticipating a revenue range of $21 to $23 million. The drop in revenue is attributable to a drop in sales to Tellab. Excluding Tellab as a customer we see a 20% increase in the rest of the revenue stream from Q4 to Q1.

The weaker Q4, Tellab’s O&Q shipments resulted in a carry over of inventories from Q4 into Q1. This carry over resulted in very weak shipment in January and February for the BPON Triplexer. We see however, now that demand has picked up significantly as the inventory situation was depleted, our contract manufacturers in China, however, could not fully react to this rapid change and demand, so we could not fully satisfy the BPON Triplexer demand in March. We see the inventory issues now behind us and demand going forward for the rest of the year looking very strong.

I would like to spend now some time on the strategic direction of the company as it relates to the combination with Fiberxon. This combination will not only dramatically increase our scale both in manufacturing and customer mine share but is also expected to ultimately reinvent how our business is run.

At Luminent we have been talking for some time with our customers about what we call a hybrid business model between a western [centric] and the China or Asia based model. Where as the western model is usually associated with higher operating costs and higher technology, the China based model is associated with low cost. In the hybrid model which we are building upon, you have advanced technical development that is highly targeted but follow through with a low operating cost model. We believe the large China based engineering, R&D, and support staff of Fiberxon, will greatly enhance the long-term technology and competitiveness of the business.

Fiberxon as a company has been for some time one of Luminent’s fiercest competitors in both the PON and transceiver markets. The reason being is that Fiberxon has been able to deliver advanced technology and follow through with aggressive prices.

The two companies come together should enhance our ability to compete on several fronts. These include manufacturing scale and supply chain consolidation, diversified customer base, further leverage of our opto electronics staff in Taiwan, critical mass on transceivers, and also accelerate advanced R&D revenue. With this synergy realized we feel it is much more likely for us to be able to achieve a 25 to 30% gross margin target rather than our current target range of 20 to 25% for Luminent alone.

Exhibit 99.2-7

In addition we should be able to maintain our aggressive growth posture while maintaining the 15 to 20% operating costs target range. If we can fully utilize these synergies, we will be much more likely to generate the kind of operating profit that will maximize the value to shareholders.

Specifically, in terms of market address Fiberxon now gives us increased exposure to two of the fastest growing areas of the optical component industry. Fiber to the Home and 10 Gigabit transceivers. In Fiber to the Home we are excited about Fiberxon’s participation in the large Asia, GEPON deployment of which Luminent so far has not been able to break into. The new combined company will now not only be a dominant supplier of GPON component but also be one of the top players in the GEPON deployment in Korea, Japan, Taiwan, and China.

On 10 Gigabit Fiberxon’s established suite of 10 Gigabit products for both [Inaudible] and 10 Gigabit Ethernet application complement Luminent’s newly announced 10 gig bit a second long-reach transceivers including the industry’s first 120-kilometer [Inaudible]. This expanded 10 Gigabit portfolio will allow the combined companies to pursue a leadership position across the 10 Gigabit market segment.

The combined company would have done approximately $140 million in revenue on a combined basis in 2006. We expect that the new company, given its exposure to faster growing segments of the optical component industry, should be able to continue to grow above industry averages going forward.

With that, I would like to thank you for joining us today. We would now take your questions.

Exhibit 99.2-8

QUESTION AND ANSWER

Operator

     Thank you. [OPERATOR INSTRUCTIONS] Our first question comes from John Harmon with Needham and Company. Please go ahead.

John Harmon - Needham and Company — Analyst

     Hi. Good afternoon. And congratulations on making money in the quarter.

Noam Lotan - MRV Communications — President, CEO

     Thank you, John.

John Harmon - Needham and Company — Analyst

     Just a couple of questions. One, I would like to ask you about what you saw in your Metro Transceivers. You said that two customers had inventory corrections. Is that inventory corrections process still going on or has it completed itself?

Noam Lotan - MRV Communications — President, CEO

     I think it’s primarily done by now. It was, you know, there were certain projects for British telecoms that were,, I guess pushed further back. We are thinking it’s primarily through, right now, but again the transceiver business tends to be short cycle business that we don’t get very extended visibility.

John Harmon - Needham and Company — Analyst

     Okay. Thank you. And secondly, you said you weren’t able to fulfill all your orders for PON transceivers in Q, in that type of situation would your customer go to another supplier, are they locked in, in terms of being supplied by you?

Noam Lotan - MRV Communications — President, CEO

     I think for the — for the orders that we are talking about they are locked in to supply from us. I think their demand change, requirement changed relatively rapidly and I don’t think anybody can respond any more quickly than our response has been.

John Harmon - Needham and Company — Analyst

Okay. And thank you. And finally when did the Fiberxon acquisition close?

Kevin Rubin - MRV Communications — CFO

     We announced — Hi, John. It ‘s Kevin. We announced that we expected to close in the first half of this year. So we are probably looking at Q2.

John Harmon - Needham and Company — Analyst

     Great. Thank you very much.

Operator

     Thank you. Our next question comes from Dave Kang with Roth Capital. Please go ahead.

Exhibit 99.2-9

Dave Kang - Roth Capital — Analyst

     Thank you. Good afternoon. First questions regarding on Fiberxon, I was wondering if you can provide what they did for gross margin and operating margin last year and Near, you said 25 to 30% gross margin target is that by when? Is it fairly quickly? And what what was their operating margin target? I didn’t catch that number.

Noam Lotan - MRV Communications — President, CEO

     Okay let me take the second half of your question. I think the 25 to 30% gross margin target is really going to come out of synergy that we now find within the company. I don’t think that’s going to be a very quick process because it takes time from the manufacturing lines to buyers, product line consolidation, I think that costs a good bit of time and customer qualification process. So we’re probably looking at kind of full synergy realization between the company, probably in a 9, 12 months window —

Dave Kang - Roth Capital — Analyst

     Got it.

Noam Lotan - MRV Communications — President, CEO

     — from the close of the company. We didn’t call out on specific operating margin targets but from the operating costs and from the gross margin target we are obviously trying to make a business within the 10 to 15% operating range.

Dave Kang - Roth Capital — Analyst

     Got it.

Kevin Rubin - MRV Communications — CFO

     And Dave, with regard to your question about their financial profile, we’ll be able to speak to that in more detail after the transaction closes.

Dave Kang - Roth Capital — Analyst

     Okay. And can you disclose on, you know, like their revenue growth projection and your top customers or significant customers that’s way over 10%? Can you disclose any of that information at this point?

Kevin Rubin - MRV Communications — CFO

     Yes. We’re not going to disclose specific customers right now.

Dave Kang - Roth Capital — Analyst

     Uh-huh.

Kevin Rubin - MRV Communications — CFO

     We think that they are definitely growing pretty rapidly.

Dave Kang - Roth Capital — Analyst

     Okay.

Exhibit 99.2-10

Kevin Rubin - MRV Communications — CFO

     And we think that they have a very strong foot print in some of the Asia GEPON deployment.

Dave Kang - Roth Capital — Analyst

     Got it. And then regarding your gross margin, more specifically Luminent gross margin, 20% excluding charge, I heard that Tellab indicated in early November that there was a price reduction on ONTs. How much of that has had an impact on your gross margin last quarter and for this current quarter that we are in?

Kevin Rubin - MRV Communications — CFO

     That didn’t have any impact on the Q4. If there was any impact for our gross margins, it was a little bit higher mix toward the PON product line and obviously the stronger component of GPON relative to BPON.

Dave Kang - Roth Capital — Analyst

     So does that mean that Tellab’s going to eat it and they are not going to pass through to you guys?

Kevin Rubin - MRV Communications — CFO

     We have built-in within scheduled price reduction, schedules that they should be able to recover.

Dave Kang - Roth Capital — Analyst

     Oh okay. Got it, got it, got it. Just a couple more. Regarding the guidance. Is this just the typical seasonality?I mean should we expect all three divisions to go down kind of similar magnitude? Or is one going to kind of go down faster than the other?

Kevin Rubin - MRV Communications — CFO

     No I mean I think what we have seen is really our historical normal trending in the first quarter of revenue coming down. You know we don’t necessarily break out the equipment in the integration business.

Dave Kang - Roth Capital — Analyst

     Right.

Kevin Rubin - MRV Communications — CFO

     But I would say in general we are seeing that first quarter weakness that you know should work its way out as the year progresses.

Dave Kang - Roth Capital — Analyst

     Got it. Got it. And then, Near just talk about your Triplexer as far as competitive landscape is concerned. I know a lot of guys claim to have Triplexers. Has that changed much in the last couple of quarters? Especially with GPON and all that?

Near Margalit - Luminent — CEO

     Not really. I would say if you are looking for a change in competitive landscape it doesn’t appear that there is a significant. I think there has been significant competition all the way through. We haven’t noticed any significant competitive change. Obviously, Fiberxon was one of the people also with Triplexer GPON transceivers.

Exhibit 99.2-11

Dave Kang - Roth Capital — Analyst

     Okay. And just one comment is that I’m looking at your website. You know you’ve still got that for today’s presentation you’ve got that third quarter numbers.

Kevin Rubin - MRV Communications — CFO

     We are aware. That’s being corrected.

Dave Kang - Roth Capital — Analyst

     Okay. Thank you.

Operator

     Thank you. Our next question comes from Tim Quinless with Mayo Capital. Please go ahead.

Tim Quinless - Mayo Capital — Analyst

     Hi, guys. Just a further clarification on the amount of ONT business that was delayed from Tellab’s into the first quarter? How big is that , I mean it seems like a — any sense of how much revenue is deferred out?

Kevin Rubin - MRV Communications — CFO

You mean from?

Tim Quinless - Mayo Capital — Analyst

     Verizon.

Kevin Rubin - MRV Communications — CFO

Q1 to Q2? Or Q4 to Q1?

Tim Quinless - Mayo Capital — Analyst

     Q4 to Q1.

Kevin Rubin - MRV Communications — CFO

     That’s — that’s tough for us to judge. Because we, you know, we obviously delivered to our pre test schedule and obviously that created inventory at — at our customer. And they — judging from the weak January and February numbers, it’s probably the total of carry forward. Which is probably in the range of anywhere from 50 to $100,000 transceivers.

Tim Quinless - Mayo Capital — Analyst

     Okay. So you expect — you are seeing a recovery in the demand ultimately from Tellab’s into Q2 but you don’t think you can get there quickly enough correct?

Kevin Rubin - MRV Communications — CFO

     That is correct. To the extent that we can get our contract manufacturers to ramp up their staff after Chinese New Year a little bit more quickly we might be able to, still be able to meet some of that. But right now we feel that it’s at high-risk to be able to kind of fully satisfy the demand that telecom wants into Q1.

Exhibit 99.2-12

Tim Quinless - Mayo Capital — Analyst

     Okay. Near you also mentioned a little bit of GPON pressure on margins. Presumably that is just a function of you ramping up to scale. I know there has been a lot of concern about sort of the pricing realizations on GPON. Does — are you satisfied that once you get up to scale you can kind of get to the 25, 30% margins on a blended basis for Luminent?

Near Margalit - Luminent — CEO

     Yes, I think you’re right. Obviously we had a similar effect when we started ramping up a little bit of BPON. We do think that once things are fully ramped up and we actually get to kind of a fully stable, mature manufacturing environment for GPON, we don’t think that GPON will negatively impact our gross margin.

Tim Quinless - Mayo Capital — Analyst

     Okay and regarding the acquisition of Fiberxon, can you just lay the landscape of the other competition the sector, whether it’s in the GEPON side, or GPON, or BPON.

Near Margalit - Luminent — CEO

     Sure.

Tim Quinless - Mayo Capital — Analyst

     Particularly given just what Ericsson went out and bought Intrasphere and just wanted to know if you had any exposure there as well.

Near Margalit - Luminent — CEO

     Yes, we definitely feel like, Intrasphere, certainly through the combination of Fiberxon and Luminent would have the dominant position for GPON component at that customer where actually both Fiberxon and Luminent are both qualified at that customer.

Tim Quinless - Mayo Capital — Analyst

Okay. Any other competitors you see out there?

Noam Lotan - MRV Communications — President, CEO

     Oh, sure. Certainly Neoplatonics is a major competitor that we consistently see. Fiberxon was the other — if we had to lay it down, kind of two top competitors that we compete on, in fiber of the home and in access transceivers, Neoplatonic and Fiberxon were the top two. For BPON obviously, [Inaudible] has been around for awhile. Those are probably the top elements store. GEPON side the primary suppliers right now is, are Gigacom through, that’s currently OCP right now and Neoplatonic and Fiberxon.

Tim Quinless - Mayo Capital — Analyst

     Okay. All right. You mentioned in the Metro Market Transceivers that BP pushout had an impact. I know some of your customers are seeing a fair bit of attraction with their new product. Is it likely that you’ll see that sector reaccelerate once that pushout kind of works its way through the system?

Noam Lotan - MRV Communications — President, CEO

     Yes we think that recovery four quarters are — are in process.

Exhibit 99.2-13

Tim Quinless - Mayo Capital — Analyst

     Okay. All right. And then just one last networking question. If you could talk about, you know, Cisco has really been hyping this sort of the next killer out being video transmission. I know you guys have done a lot of work with the likes of Limelight and Expedia. Can you give us a sense of the competitive layout there in terms of your position how you do there, and also in the out of band networking area that seems like the KBM product looks like it compares pretty favorably at the [Inaudible] offering. Just wanted to know if you are getting any traction in that space as well and kind of what the opportunity that might be there as well.

Noam Lotan - MRV Communications — President, CEO

     Sure, so first I think with respect to Cisco being, talking a lot about the video as one of the next killer apps, certainly three or four years ago, five years ago Cisco was talking very much about voice over IP being the next growth driver into networking. And currently, obviously video or triple play in general becomes a strong growth driver. Where we are addressing this, certainly we — during the, during Q4, to give you just one example, we announced a new Metro Ethernet access product , the OptiSwitch 910 and 912. These products, along with other of our products, two weeks ago completed the testing for Ethernet in the first mile standard, and that’s definitely an important milestone for qualification into carrier class large scale Metro Ethernet deployment type.

The way we help address those triple play application, we actually have a product we believe is superior to what’s out there in the market, specifically in terms of catering for video. We are talking about high band width. We can provide the full Gigabit to an enterprise customer, a hospital or whatever. And at the same time over that high band width we also allow for wave long what we call jumbo package which facilitate the transfer of video transmission. So we certainly address that with the Metro E equipment that we have.

Also, recently, we announced a — a customer win in the U.S. The School of Cinematography. University of Southern California where we basically implemented a network that allows the uncompressed high definition video to go over a new SFP transceiver that we basically developed for that special purpose. And we see some additional opportunities. It was tested by one of the largest labs, carrier labs in Japan and successfully was — went through those testing. So we basically see a, certainly agree with the fact that large files, long jumbo packets and lots of traffic and high band width are certainly the drivers that are going to take the industry to the next level in terms of a Metro expansion.

To answer your question about the KVM, indeed we are beginning to have traction and the feedback from customers we’re getting is excellent. Clearly we don’t have the breadth of the product that [Inaudible] might have, but on the specific product to product, head on, the feedback we are getting is actually excellent. That really a very good performance for the KVM product we have.

Tim Quinless - Mayo Capital — Analyst

     Great. Thank you.

Operator

     Thank you. Our next question comes from John Anthony with Cowen and Company. Please go ahead.

John Anthony - Cowen and Company — Analyst

     Good afternoon gentlemen.

Noam Lotan - MRV Communications — President, CEO

     Hello John.

John Anthony - Cowen and Company — Analyst

     I have a few questions. Starting on the networking side. I apologize if this has already been asked. The strength in North America in the fourth quarter was that largely specific to one or two customers? Or was that broad based? Was it Limelight, Expedia or —

Noam Lotan - MRV Communications — President, CEO

     Yes it was very much broad based. It’s not more specific to any one customer or another.

Exhibit 99.2-14

John Anthony - Cowen and Company — Analyst

     Okay. I mean is that attributable to — it’s kind of hard to believe that it’s attributable to strength in North America given the weakness that was broadly felt in North America. So what is that a result of?

Near Margalit - Luminent — CEO

     We did have nice growth of the LambdaDriver and the Fiberdriver product lines. So you are talking about Metro Ethernet and also [transporters].

John Anthony - Cowen and Company — Analyst

     Okay. And then relative to LambdaDriver, can you give us an update where you guys are with your [rotom] efforts?

Noam Lotan - MRV Communications — President, CEO

     Good question actually. We will be as of next month, we will be testing our [rotom] technology with a large federal testing lab. And we will certainly be willing and able to talk about that in more detail when we have the product out.

John Anthony - Cowen and Company — Analyst

     Is that the kind of thing where you’ll be able to — you’ll be able to sell it for — for revenue this year? And if so, at what point?

Noam Lotan - MRV Communications — President, CEO

     Oh, yes. We believe we can get started already in the mid-year. Even before that.

John Anthony - Cowen and Company — Analyst

     Okay. On the integration side, you know the — the uptick in the gross margins not withstanding, can you just give us a sense for your feelings currently on the strategicness of this business?

Noam Lotan - MRV Communications — President, CEO

     Okay. I’ll take that question, John. The — and I think I did mention in previous calls. The importance of having system integration assets in Europe was paramount in us addressing tier one opportunities with Metro Ethernet. We have approximately 400 people in the sales, marketing, support, network engineering, installation in Europe. And when we work with carriers such as France telecom, a four star telecom, telecom Italia, [Inaudible] and — and other mobile carriers in Europe, we do have that gross assets on the ground. And that is a very important element of our strategy.

Now, bear in mind that Metro Ethernet started in Europe before it actually — it began to emerge in North America. So having those assets in place in advance basically helped us become one of the key players in some of those projects. I mean, we’ve supplied probably tens of millions of dollars worth of equipment including probably the largest Metro E network that is out there which is basically spanning across Sweden, north and south, and the — we have hundreds of thousands of end customers on those networks. So that basically gave us this wonderful base.

In addition, I mentioned on the call that the network integration asset that we have are profitable and cash flow positive. So we — we seem to be resonating well. Now having said that, obviously they are selling off third party equipment and installing third party equipment. And that certainly does not detract us from — I give you a good example. You ask me a question I’ll give you an answer. We had a multiple wins in the European country with the three mobile carriers. Two of them already deployed. This is an application where a piece of test equipment sold by one of our integration companies basically works with our media cross connect product to provide realtime online live monitoring of a large number of fiber network without having to disrupt the traffic itself.

By using passive optical taps into a — what we call a media cross connect, we are able to provide live realtime monitoring of the traffic on the network. Now that’s a real interesting application. It was developed by us and in conjunction with our own system integration company. So this is just one example.

Exhibit 99.2-15

John Anthony - Cowen and Company — Analyst

     Okay. Great. Moving over to the optical side, can you just discuss for a second the progress on the — the long reach 10 gig DWDM and the 4 gig products you recently introduced?

Kevin Rubin - MRV Communications — CFO

     I think they are still in the qualification stages with our customer. I think we’re sampling and working with about 10 leading customers on the long-range DWM product. To the extent that this is kind of relatively new technology as a system level as these kind of products did not exist until very recently, we are limited in our ultimate revenue ramp by our customers ramping their systems. But we feel very confident that we have a very strong product there and should do very well. We think also the combination with Fiberxon will allow us to sell that product not just as a point product but really offer a full suite of XFPs for medium reach and short reach applications. So we feel like we are going to be strengthened quite a bit with being able to offer a full product line.

John Anthony - Cowen and Company — Analyst

     Okay. I know you are somewhat limited in what you can say about Fiberxon’s details, but can you at least give us a sense whether Fiberxon shares any of the same significant metro customers that you do?

Near Margalit - Luminent — CEO

     For the most part no. They have a lot of significant customers but they seem, it seems to be where we have been the most successful, they have been not as successful, and vice-versa.

John Anthony - Cowen and Company — Analyst

     Okay. Also, can you give us an idea for what the capacity is of Fiberxon’s facilities from a production standpoint? Rough kind of I can say short range capacity obviously they’re continuing to expand additional capacity. But they are looking at something like 400,000 to 500,000 modules a quarter. Do you think their capacity is sufficient to — the capacity they have is sufficient to take the overflow from — from your production levels?

Near Margalit - Luminent — CEO

     Yes. They have a mixed model as well with in-house manufacturing and contract manufacturing in China. So the ability for us to consolidate all our manufacturing activities together is definitely, definitely possible and should not be an overly long process.

John Anthony - Cowen and Company — Analyst

     Okay. And then Near, can you also just give us a sense for some of the other products Luminent is — is looking to roll-out? I know you don’t want to jump the gun too much. But if you can give us a sense for how you see the mix evolving over the next few quarters that would be very helpful.

Near Margalit - Luminent — CEO

     There’s obviously two primary areas where we want to maintain our — we want maintain full strength on the PON area, make sure we have all the different suite of areas for all the different PON deployments worldwide both on the central office side and the home office side. That’s an area that’s clearly where we are very, very strong already and we want to make sure that we continue our strength there. Outside of that we are obviously hoping to gain critical strength within the higher end transceivers such a 10 Gigabits, 300 NMSA transponders. We’ve got a pretty — I think we will have a better chance to reach critical mass to really have customer line share and footprint on the transceiver space.

So in terms of roadmap, there is a lot of fill in that we need to do as a combined company to be kind of a full service Metro and long haul kind of transceiver supplier. And I think that’s where we’re going so that involves a number of different areas. Probably we won’t want to get into specifics yet.

John Anthony - Cowen and Company — Analyst

     Okay great. Thanks guys.

Exhibit 99.2-16

Noam Lotan - MRV Communications — President, CEO

     Thanks John.

Operator

     Thank you. [OPERATOR INSTRUCTIONS] We have no further questions. Please continue.

Noam Lotan - MRV Communications — President, CEO

     Thank you, operator. Thank you, everyone, for being on the call today. We are very pleased with our 2006 results and our prospects for ‘07. Going forward, the growth opportunities at Luminent and in our networking business are encouraging for the year ahead. We want to thank you for participating and we hope to see you on our next call. Thank you very much.

Operator

     Thank you. Ladies and gentlemen, this concludes the MRV Communications fourth quarter and fiscal year 2006 financial results conference. Thank you for your participation. You may now disconnect.

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Exhibit 99.2-17

4th Quarter 2006 Financial Results Teleconference February 15, 2007 MRV Communications, Inc. 20415 Nordhoff Street Chatsworth, California 91311 (818) 886-MRVC (6782) www.mrv.com

Forward-Looking Statements This presentation contains statements regarding future financial and operating results of MRV, MRV's expected revenues and net income (loss) for the first quarter of 2007 that ends on March 31, 2007, management's belief that MRV is positioned to take advantage of key emerging industry trends and management's expectations regarding those trends, the proposed transaction between MRV and Fiberxon, benefits and synergies of the proposed transaction and other statements about management's future expectations, beliefs, goals, plans or prospects and those of the market segments in which MRV and Luminent are engaged that are based on management's current expectations, estimates, forecasts and projections about MRV, Luminent and Fiberxon and the combined company, as well as MRV's, Luminent's and Fiberxon's and the combined company's future performance and the industries in which MRV, Luminent and Fiberxon operate and the combined company will operate, in addition to managements' assumptions. These statements constitute forward- looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such as "expects," "anticipates," "envisions," "estimates," "targets," "intends," "plans," "believes," "seeks," "should," "forecasts," "projects," variations of such words and similar expressions are intended to identify such forward-looking statements which are not statements of historical facts. These forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to assess. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Actual results could differ materially because of the following factors, among others, which may cause revenues, gross margins and income (loss) to fall short of anticipated levels: vigorous competition relating to our entry into new markets or from our existing markets; market acceptance of new products; continued market acceptance of existing products and continued success in selling the products of other companies; product price discounts; the timing and amount of significant orders from customers; delays in product development and related product release schedules; obsolete inventory or product returns; warranty and other claims on products; technological shifts; the availability of competitive products at prices below MRV's or Luminent's prices; the continued ability to protect MRV's and Luminent's intellectual property rights; changes in product mix; maturing product life cycles; product sale terms and conditions; currency fluctuations; implementation of operating cost structures that align with revenue growth; the financial condition of MRV's and Luminent's customers and vendors; adverse results in litigation; the impact of legislative actions; higher insurance costs; potential new accounting pronouncements; the effects of terrorist activity and armed conflict; disruptions in general economic activity and changes in MRV's or Luminent's operations and security arrangements; the effects of travel restrictions and quarantines associated with major health problems, such as the Severe Acute Respiratory Syndrome, on general economic activity; decreases in corporate information technology spending or other changes in general economic conditions that affect demand for MRV's or Luminent's products. For further information regarding risks and uncertainties associated with MRV's and Luminent's businesses, please refer to the "Management's Discussion and Analysis of Results of Operations and Financial Condition" and "Risk Factors" sections of MRV's SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting MRV's investor relations department or at MRV's investor relations website at http://ir.mrv.com. All information in this presentation is as of February 14, 2007. MRV undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in MRV's expectations.

MRV Speakers Introduction Anne-Marie Frisch Investor Relations Overview & Highlights Noam Lotan President and CEO Financial Review Kevin Rubin CFO Executive Review Near Margalit CEO, LuminentOIC Q & A

Non-GAAP Financial Measures Important Information Regarding Non-GAAP Financial Measures During this presentation references to financial measures of MRV will include references to non-GAAP financial measures for the periods provided. These non-GAAP financial measures exclude the non-cash share-based compensation expense as a result of the adoption of SFAS No. 123(R) on January 1, 2006. Prior period amounts have not been restated to include share-based compensation expense, as permitted by SFAS No. 123(R). A reconciliation between GAAP and non-GAAP financial information is provided on the following slide.

Non-GAAP Financial Measures Non-GAAP Financial Measures

4th Quarter 2006 Financial Results Teleconference Overview & Highlights Noam Lotan President and Chief Executive Officer

4th Quarter 2006 Financial Results Teleconference Financial Review Kevin Rubin Chief Financial Officer

Key Measures Key Measures

Non-GAAP Results of Operations Non-GAAP Results of Operations

Non-GAAP Networking Group Non-GAAP Networking Group

Non-GAAP Optical Components Group Group Group

Non-GAAP Development Stage Group Group Group

Revenue Analysis by Geographical Region Region Region

Revenue by Groups of Similar Products Products Products

4th Quarter 2006 Financial Results Teleconference Executive Overview Near Margalit Chief Executive Officer, LuminentOIC

4th Quarter 2006 Financial Results Teleconference Q & A