Rule 424(b)(3)
                                                              File No. 333-71178


                            MRV COMMUNICATIONS, INC.

                                  COMMON STOCK

        The selling stockholder of MRV Communications, Inc. listed below in the
section of this prospectus called "Selling Stockholder" is offering and selling
up to 2,947,889 shares of MRV's common stock.

        The selling stockholder may offer its shares through public or private
transactions, in or off the over-the-counter market in the United States, at
prevailing market prices, or at privately negotiated prices. For details of how
the selling stockholder may offer its MRV common stock, please see the section
of this prospectus called "Plan of Distribution." MRV will not receive any
proceeds from the sales of shares by the selling stockholder. MRV's common stock
is quoted on the Nasdaq National Market under the symbol "MRVC." On January 15,
2002, the closing price of MRV's common stock on the Nasdaq National Market was
$4.23 per share.

        YOUR PURCHASE OF THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING AT PAGE 6.

                              -------------------

        Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the MRV shares offered or sold under
this prospectus, nor have these organizations determined that this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.

                              -------------------


                The date of this prospectus is January 15, 2002.






                                TABLE OF CONTENTS


                                                                       
About MRV................................................................  2
Forward-Looking Statements...............................................  5
Risk Factors.............................................................  6
Use of Proceeds.......................................................... 22
Dividend Policy.......................................................... 22
Price Range of Common Stock.............................................. 23
Selling Stockholder...................................................... 24
Plan of Distribution..................................................... 25
Legal Matters............................................................ 27
Experts.................................................................. 27
Where You Can Find More Information...................................... 27
Information Incorporated By Reference.................................... 28
Index to Pro Forma Financial Information................................. 28




                                    ABOUT MRV

        We create, acquire, finance and operate companies, and through them,
design, develop, manufacture and market products, which enable high-speed
broadband communications. We concentrate on companies and products devoted to
optical components and Internet infrastructure systems. We have leveraged our
early experience in fiber optic technology into a number of well-focused
operating units specializing in advanced fiber optic components, switching,
routing, transaction management and wireless optical transmission systems which
we have created, financed or acquired.

        Our principal operating units that constituted wholly or majority owned
subsidiaries at September 30, 2001 were:

     -  Luminent, Inc. Luminent designs, manufactures and sells a comprehensive
        line of singlemode active and passive fiber optic components for
        high-capacity data transmission in the metropolitan and access markets.
        Leading network equipment manufacturers rely on Luminent to provide
        technical depth, responsive customer service and volume manufacturing to
        meet the increasing requirements for transmission capacity and speed
        between nationwide telecommunications networks and end users.

        In November 2000, Luminent completed an initial public offering of its
        common stock. At September 30, 2001, we owned approximately 92% of the
        outstanding capital stock of Luminent. While we originally planned to
        spin-off to our stockholders the remaining Luminent common stock we
        owned, we decided not to make that distribution and instead to merge
        Luminent into one of our wholly-owned subsidiaries, thereby eliminating
        public ownership of Luminent's common stock. In that merger, which was
        completed on December 28, 2001, we are issuing 0.43 shares of our common
        stock for each outstanding share of Luminent common stock not already
        owned by us, or approximately 5,160,000 of our shares, and to assume
        Luminent's outstanding stock options adjusted for that exchange ratio.

     -  Optical Access, Inc. Optical Access designs, manufactures and markets
        optical wireless products that enable the delivery of high-speed
        communications traffic to the portion of the communications network
        commonly known as the last mile, which extends from the end user to the
        service provider's central office. Optical Access' solutions to the
        last-mile


                                       2



        bottleneck bypass the incumbent carrier's copper access network with a
        comprehensive, integrated access solution, using optical wireless
        technology. The building blocks of Optical Access' solution include the
        TereScope(TM), for optical wireless links, and the OptiSwitch(TM), for
        switching, provisioning and mesh enabling. At September 30, 2001, we
        owned all of the outstanding capital stock of Optical Access.

     -  CEScomm, Inc. CEScomm (formerly Creative Electronic Systems SA or CES)
        is developing and providing equipment to manufacturers of cellular
        network infrastructure equipment and mobile operators and service
        providers for the third generation of wireless solutions commonly known
        as 3G. 3G is the generic term used for the next generation of mobile
        communications systems. These new systems provide enhanced services to
        those available today i.e., voice, text and data. CEScomm specializes in
        products that provide the real-time conversion of radio signals
        generated by Internet ready mobile devices into asynchronous transfer
        mode, or ATM, traffic streams. At December 31, 2000, we owned all of the
        outstanding capital stock of CEScomm.

     -  iTouch Communications, Inc. iTouch Communications, Inc. provides
        next-generation Internet infrastructure solutions that enable service
        providers and carriers to deliver and monitor, on a real-time basis,
        high-speed Internet services. iTouch's products combine transaction
        management with Internet protocol, or IP, routing and wide-area network,
        or WAN, technologies, which allow for faster development of feature rich
        high-speed data acquisition and management systems. At September 30,
        2001, we owned all of the outstanding capital stock of iTouch.

     -  NBase-Xyplex, Inc. NBase-Xyplex provides products and services, such as
        the Fiber Driver, to enhance network infrastructures for city carriers,
        service providers, cable operators and campus and enterprise networks.
        Its products and technologies have been utilized in metropolitan area
        fiber-based networks, enabling smart access to the WAN, as well as in
        local area network, or LAN, switching, building enterprise/corporate
        data networks. At September 30, 2001, we owned all of the outstanding
        capital stock of Nbase-Xyplex.

     -  European Subsidiaries. We maintain European subsidiaries and branch
        offices in France, Germany, the United Kingdom, Italy, Switzerland,
        Sweden, Norway and Finland, which are involved in sales, services and
        distribution of data networking products. The activities of these
        companies include system design, integration and support as well as
        product sales to enterprise customers and carriers, including service
        providers. Products sold include products manufactured by other MRV
        companies or divisions, as well as products manufactured by third party
        vendors supplied as part of network system integration and distribution
        services. Such specialization allows us to penetrate targeted vertical
        and regional markets. As of September 30, 2001, we owned approximately
        80% of its European subsidiaries.

        Our development stage companies which we founded or have invested in as
of September 30, 2001 were:

     -  Charlotte's Networks, Inc. Charlotte's Networks is a start-up company
        that is developing a core router for large service providers and
        carriers. The Aranea core router is Charlotte's first product. The
        Aranea router is capable of carrying both IP packets and time-division
        multiplexing, or TDM, voice traffic and enables the current WAN to grow
        in high orders of magnitude both in processing power and rate of
        transmission. In addition, the router


                                       3


        provides multi-services required by telecommunication companies for
        efficient and flexible transmission of voice over data networks. At
        September 30, 2001, we owned approximately 53% of the outstanding
        capital stock of Charlotte's Networks on a fully diluted basis.

     -  Zuma Networks, Inc. Zuma Networks is a startup company that is
        developing a next generation Gigabit Ethernet switch router platform. At
        September 30, 2001, we owned all of the outstanding capital stock of
        Zuma Networks.

     -  Optical Crossing Inc. Optical Crossing designs, develops and
        manufactures advanced fiber optic communication components and systems
        for the telecommunications industry. At September 30, 2001, we owned
        approximately 60% of the outstanding capital stock of Optical Crossing
        on a fully diluted basis.

     -  Zaffire, Inc. Zaffire is focused on developing a next-generation,
        optical services networking system for service providers. At December
        31, 2000, we owned approximately 22% of the outstanding capital stock of
        Zaffire on a fully diluted basis. In July 2001, Zaffire reached an
        agreement with Centerpoint Broadband Technologies, Inc., under which
        Centerpoint would acquire Zaffire in an all stock transaction. Upon
        completion of the acquisition, we expect to own less than 10% of
        Centerpoint. Centerpoint develops high capacity transport systems that
        maximize network performance for both optical and wireless networks.
        These highly scalable, dynamically flexible systems allow service
        providers advanced levels of bandwidth efficiency, capacity and high
        service velocity.

     -  RedC Optical Networks, Inc. RedC has developed a complete line of
        optical modules used for operating, monitoring and protecting optical
        networks including: optical amplifiers, add/drop modules, protection and
        restoration modules and dense wave division multiplexing, or DWDM,
        monitoring. At September 30, 2001, we owned approximately 35% of the
        outstanding capital stock of RedC on a fully diluted basis.

     -  Hyperchannel Ltd. Hyperchannel, which does business under its trademark
        Hyporium is an independent Internet market maker for the information
        technology, or IT, industry, enabling IT vendors, distributors and
        resellers to trade online. Hyporium offers an alternative route to
        market through an online trading hub and reseller web storefronts. At
        September 30, 2001, we owned approximately 42% of the outstanding
        capital stock of Hyperchannel on a fully diluted basis.

        Our principal executive offices are located at 20415 Nordhoff Street,
Chatsworth, California 91311 and our telephone number is (818) 773-0900.

        In this prospectus, the terms "company," MRV, "we," "us," and "our"
refer to MRV Communications, Inc., a Delaware corporation, and its consolidated
subsidiaries and, unless the context otherwise indicates, "common stock" refers
to the common stock, par value $0.0017 per share, of MRV.


                                       4


        On May 11, 2000, we effected a two-for-one stock split of outstanding
shares and an increase in our authorized common stock from 80,000,000 to
160,000,000 shares. The stock split entitled each stockholder of record at the
close of business on May 11, 2000 to receive one additional share for every
outstanding share of common stock held on that date. All share information in
this prospectus gives effect to the two-for-one stock split.

                           FORWARD-LOOKING STATEMENTS

WE MAKE FORWARD-LOOKING STATEMENTS IN THIS PROSPECTUS THAT MAY NOT PROVE TO BE
ACCURATE.

        This prospectus contains forward-looking statements including statements
regarding, among other items, our and Luminent's business strategy, growth
strategy and anticipated trends in our business. We may make additional written
or oral forward-looking statements from time to time in filings with the
Securities and Exchange Commission or otherwise. When we use the words
"believe," "expect," "anticipate," "project" and similar expressions, this
should alert you that this is a forward-looking statement. These forward-looking
statements are largely based on our expectations. They are subject to a number
of risks and uncertainties, some of which cannot be predicted or quantified and
are beyond our control. Future events and actual results could differ materially
from those set forth in, contemplated by, or underlying the forward-looking
statements. Statements in this prospectus, including those set forth below in
"Risk Factors," describe factors, among others, that could contribute to or
cause these differences. In light of these risks and uncertainties, there can be
no assurance that the forward-looking information contained in this prospectus
will in fact transpire or prove to be accurate. All subsequent written and oral
forward-looking statements attributable to us or persons acting on our behalf
are expressly qualified in their entirety by this section.



                                       5




                                  RISK FACTORS

        Investment in shares of MRV common stock involves a high degree of risk.
Set forth below and elsewhere in this prospectus are risks and uncertainties
that could cause MRV's actual results to differ materially from the results
contemplated by the forward-looking statements contained in this prospectus and
in public statements and press releases we make from time to time.

WE INCURRED A NET LOSS IN THE YEAR ENDED DECEMBER 31, 2000 AND DURING THE
NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2001, PRIMARILY AS A RESULT OF THE
AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES AND DEFERRED COMPENSATION CHARGES
FROM RECENT ACQUISITIONS. WE EXPECT TO CONTINUE TO INCUR NET LOSSES FOR THE
FORESEEABLE FUTURE.

        We reported a net loss of $153.0 million for the year ended December 31,
2000 and $238.1 million for the nine months ended September 30, 2001. A major
contributing factor to the net losses was the amortization of goodwill and
intangibles and deferred stock compensation related to our acquisitions of Fiber
Optic Communications, Jolt, Quantum Optech, AstroTerra and Optronics and our
employment arrangements with Luminent's former President and Luminent's Chief
Financial Officer. We will continue to record amortization of goodwill and
intangibles and deferred stock compensation relating to these acquisitions and
the employment arrangements with these executives going forward. Effective
January 1, 2002, with the adoption of SFAS 142 we will stop amortization of
goodwill however we may be required to record an impairment charge (see Recently
Issued Accounting Standards). As a consequence of this amortization of goodwill
and deferred stock compensation charges, we do not expect to report net income
in the foreseeable future.

OUR BUSINESS HAS BEEN ADVERSELY IMPACTED BY THE WORLDWIDE ECONOMIC SLOWDOWN AND
RELATED UNCERTAINTIES

        Weaker economic conditions worldwide, particularly in the U.S. and
Europe, have contributed to the current technology industry slowdown and
impacted our business resulting in:

     -  reduced demand for of our products, particularly Luminent's fiber optic
        components;

     -  increased risk of excess and obsolete inventories;

     -  increased price competition for our products;

     -  excess manufacturing capacity under current market conditions; and

     -  higher overhead costs, as a percentage of revenues.

        These unfavorable economic conditions and reduced capital spending in
the telecommunications industry detrimentally affected sales to service
providers, network equipment companies, e-commerce and Internet businesses, and
the manufacturing industry in the United States during 2001 to date, and appear
to continue to affect these industries in the fourth quarter of 2001 and may
affect them for the balance of 2001 and thereafter. Announcements by industry
participants and observers indicate there is a slowdown in industry spending and


                                       6



participants are seeking to reduce existing inventories and we are experiencing
these reductions in our business. As a result of these factors, we recorded
during the three months ended June 30 and September 30, 2001 consolidated
one-time charges from our subsidiary, Luminent, which include the write-off of
inventory, purchase commitments, asset impairment, workforce reduction,
restructuring costs and other unusual items. The aggregate one-time charges
recorded during second and third quarter of 2001 were $41.2 million and $2.4
million, respectively. These charges are the result of the lower demand for
Luminent's products and pricing pressures stemming from the continuing downturn
in the communications equipment industry generally and the optical components
sector in particular.

        Additionally, these economic conditions are making it very difficult for
MRV, Luminent and our other companies, our customers and our vendors to forecast
and plan future business activities. This level of uncertainty severely
challenges our ability to operate profitably or to grow our businesses. In
particular, it is difficult to develop and implement strategy, sustainable
business models and efficient operations, and effectively manage manufacturing
and supply chain relationships. Many analysts are predicting a further downturn
in the U.S. economy in the aftermath of the terrorist attacks on the World Trade
Center in New York and the Pentagon in Washington DC in September 2001. As
discussed below in the section of these Risk Factors entitled "We may have
difficulty managing our business," we have lost a key member of our management
team in the attack on the World Trade Center and that loss has already had and
may in the future have adverse consequences on our business. However, we do not
know how the consequences of these attacks will additionally affect our
business. If the economic or market conditions continue or further deteriorate,
or if the economic downturn is exacerbated as a result of political, economic or
military conditions associated with current domestic and world events, our
businesses, financial condition and results of operations could be further
impaired.

OUR MARKETS ARE SUBJECT TO RAPID TECHNOLOGICAL CHANGE, AND TO COMPETE
EFFECTIVELY, WE MUST CONTINUALLY INTRODUCE NEW PRODUCTS THAT ACHIEVE MARKET
ACCEPTANCE.

        The markets for our products are characterized by rapid technological
change, frequent new product introductions, changes in customer requirements and
evolving industry standards. We expect that new technologies will emerge as
competition and the need for higher and more cost effective transmission
capacity, or bandwidth, increases. Our future performance will depend on the
successful development, introduction and market acceptance of new and enhanced
products that address these changes as well as current and potential customer
requirements. The introduction of new and enhanced products may cause our
customers to defer or cancel orders for existing products. We have in the past
experienced delays in product development and these delays may occur in the
future. Therefore, to the extent customers defer or cancel orders in the
expectation of a new product release or there is any delay in development or
introduction of our new products or enhancements of our products, our operating
results would suffer. We also may not be able to develop the underlying core
technologies necessary to create new products and enhancements, or to license
these technologies from third parties. Product development delays may result
from numerous factors, including:

     -  changing product specifications and customer requirements;


                                       7



     -  difficulties in hiring and retaining necessary technical personnel;

     -  difficulties in reallocating engineering resources and overcoming
        resource limitations;

     -  difficulties with contract manufacturers;

     -  changing market or competitive product requirements; and

     -  unanticipated engineering complexities.

        The development of new, technologically advanced products is a complex
and uncertain process requiring high levels of innovation and highly skilled
engineering and development personnel, as well as the accurate anticipation of
technological and market trends. In order to compete, we must be able to deliver
products to customers that are highly reliable, operate with its existing
equipment, lower the customer's costs of acquisition, installation and
maintenance, and provide an overall cost-effective solution. We cannot assure
you that we will be able to identify, develop, manufacture, market or support
new or enhanced products successfully, if at all, or on a timely basis. Further,
we cannot assure you that our new products will gain market acceptance or that
we will be able to respond effectively to product announcements by competitors,
technological changes or emerging industry standards. Any failure to respond to
technological changes would significantly harm our business.

DEFECTS IN OUR PRODUCTS RESULTING FROM THEIR COMPLEXITY OR OTHERWISE COULD HURT
OUR FINANCIAL PERFORMANCE.

        Complex products, such as those our companies and we offer, may contain
undetected software or hardware errors when we first introduce them or when we
release new versions. The occurrence of these errors in the future, and our
inability to correct these errors quickly or at all, could result in the delay
or loss of market acceptance of our products. It could also result in material
warranty expense, diversion of engineering and other resources from our product
development efforts and the loss of credibility with, and legal actions by, our
customers, system integrators and end users. For instance, during late 2000, we
were informed that certain Luminent transceivers sold to Cisco were experiencing
field failures. Through discussions with Cisco through September 2001,
Luminent's management agreed to replace the failed units, which we believe
resolves this issue. We expect the ultimate replacement of these failed
transceivers will cost approximately $3.8 million. Any of these or other
eventualities resulting from defects in our products could cause our sales to
decline and have a material adverse effect on our business, operating results
and financial condition.

OUR GROWTH RATE MAY BE LOWER THAN HISTORICAL LEVELS AND OUR RESULTS COULD
FLUCTUATE SIGNIFICANTLY FROM QUARTER TO QUARTER.

        Our revenues may grow at a slower rate in the future than we have
experienced in previous periods and, on a quarter-to-quarter basis, our growth
in revenue may be significantly lower than our historical quarterly growth
rates. Our operating results for a particular quarter are extremely difficult to
predict. Our revenue and operating results could fluctuate substantially from
quarter to quarter and from year to year. This could result from any one or a
combination of factors such as


                                       8


     -  the cancellation or postponement of orders,

     -  the timing and amount of significant orders from our largest customers,

     -  our success in developing, introducing and shipping product enhancements
        and new products,

     -  the mix of products we sell,

     -  adverse effects to our financial statements resulting from, or
        necessitated by, past and future acquisitions or deferred compensation
        charges,

     -  new product introductions by our competitors,

     -  pricing actions by our competitors or us,

     -  the timing of delivery and availability of components from suppliers,

     -  changes in material costs, and

     -  general economic conditions.

        Moreover, the volume and timing of orders we receive during a quarter
are difficult to forecast. From time to time, our customers encounter uncertain
and changing demand for their products. Customers generally order based on their
forecasts. If demand falls below these forecasts or if customers do not control
inventories effectively, they may cancel or reschedule shipments previously
ordered from us. Our expense levels during any particular period are based, in
part, on expectations of future sales. If sales in a particular quarter do not
meet expectations, our operating results could be materially adversely affected.

        Our success is dependent, in part, on the overall growth rate of the
fiber optic components and networking industry. We can give no assurance that
the Internet or the industries that serve it will continue to grow or that we
will achieve higher growth rates. Our business, operating results or financial
condition may be adversely affected by any decreases in industry growth rates.
In addition, we can give no assurance that our results in any particular period
will fall within the ranges for growth forecast by market researchers.

        Because of these and other factors, you should not rely on
quarter-to-quarter comparisons of our results of operations as an indication of
our future performance. It is possible that, in future periods, our results of
operations may be below the expectations of public market analysts and
investors. This failure to meet expectations could cause the trading price of
our common stock to decline. Similarly, the failure by our competitors or
customers to meet or exceed the results expected by their analysts or investors
could have a ripple effect on us and cause our stock price to decline.


                                       9



THE LONG SALES CYCLES FOR OUR PRODUCTS MAY CAUSE REVENUES AND OPERATING RESULTS
TO VARY FROM QUARTER TO QUARTER, WHICH COULD CAUSE VOLATILITY IN OUR STOCK
PRICE.

        The timing of our revenue is difficult to predict because of the length
and variability of the sales and implementation cycles for our products. We do
not recognize revenue until a product has been shipped to a customer, all
significant vendor obligations have been performed and collection is considered
probable. Customers often view the purchase of our products as a significant and
strategic decision. As a result, customers typically expend significant effort
in evaluating, testing and qualifying our products and our manufacturing
process. This customer evaluation and qualification process frequently results
in a lengthy initial sales cycle of, depending on the products, many months or
more. In addition, some of our customers require that our products be subjected
to lifetime and reliability testing, which also can take months or more. While
our customers are evaluating our products and before they place an order with
us, we may incur substantial sales and marketing and research and development
expenses to customize our products to the customer's needs. We may also expend
significant management efforts, increase manufacturing capacity and order long
lead-time components or materials prior to receiving an order. Even after this
evaluation process, a potential customer may not purchase our products. Even
after acceptance of orders, our customers often change the scheduled delivery
dates of their orders. Because of the evolving nature of the optical networking
and network infrastructure markets, we cannot predict the length of these sales,
development or delivery cycles. As a result, these long sales cycles may cause
our net sales and operating results to vary significantly and unexpectedly from
quarter-to-quarter, which could cause volatility in our stock price.

THE PRICES OF OUR SHARES MAY CONTINUE TO BE HIGHLY VOLATILE.

        Historically, the market price of our shares has been extremely
volatile. The market price of our common stock is likely to continue to be
highly volatile and could be significantly affected by factors such as

     -  actual or anticipated fluctuations in our operating results,

     -  announcements of technological innovations or new product introductions
        by us or our competitors,

     -  changes of estimates of our future operating results by securities
        analysts,

     -  developments with respect to patents, copyrights or proprietary rights,
        and

     -  general market conditions and other factors.

        In addition, the stock market has experienced extreme price and volume
fluctuations that have particularly affected the market prices for the common
stocks of technology companies in particular, and that have been unrelated to
the operating performance of these companies. These factors, as well as general
economic and political conditions, may materially adversely affect the market
price of our common stock in the future. Similarly, the failure by our
competitors or


                                       10



customers to meet or exceed the results expected by their analysts or investors
could have a ripple effect on us and cause our stock price to decline.
Additionally, volatility or a lack of positive performance in our stock price
may adversely affect our ability to retain key employees, all of whom have been
granted stock options.

OUR STOCK PRICE MIGHT SUFFER AS A CONSEQUENCE OF OUR INVESTMENTS IN AFFILIATES.

        We have created several start-up companies and formed independent
business units in the optical technology and Internet infrastructure areas. We
account for these investments in affiliates according to the equity or cost
methods as required by accounting principles generally accepted in the United
States. The market value of these investments may vary materially from the
amounts shown as a result of business events specific to these entities or their
competitors or market conditions. Actual or perceived changes in the market
value of these investments could have a material impact on our share price and
in addition could contribute significantly to volatility of our share price.

OUR DECISION TO ABANDON THE SPIN-OFF OF LUMINENT TO OUR STOCKHOLDERS AND TO
ELIMINATE PUBLIC OWNERSHIP OF LUMINENT'S COMMON STOCK COULD HARM THE MARKET
PRICE OF OUR COMMON STOCK.

        In 2000 we announced our intention to distribute to our stockholders the
outstanding common stock of Luminent that we owned assuming certain conditions
were met. While we informed our stockholders that we were not obligated to make
this distribution and might not if economic, market or other conditions caused
our board to decide against it, stockholders and analysts may react negatively
to our decision to abandon the distribution or to eliminate public ownership of
Luminent's common stock through the merger of Luminent into one of our
wholly-owned subsidiaries. On September 17, 2001, the first trading day
following the announcement of our decision to abandon the distribution and
effect this merger, the closing price of our stock decreased from $3.23 to
$2.43. While September 17, 2001, was the first day of the reopening of the stock
market in the United States following the terrorists events of September 11,
2001, the decrease in the market price of our stock could reflect a negative
reaction to the news of this merger and, depending on investors' continuing
assessment of the impact of these events on our company, this reaction could be
sustained or cause the market price of our shares drop lower.

OUR BUSINESS IS INTENSELY COMPETITIVE AND THE EVIDENT TREND OF CONSOLIDATIONS IN
OUR INDUSTRY COULD MAKE IT MORE SO.

        The markets for fiber optic components and networking products are
intensely competitive and subject to frequent product introductions with
improved price/performance characteristics, rapid technological change and the
continual emergence of new industry standards. We compete and will compete with
numerous types of companies including companies that have been established for
many years and have considerably greater financial, marketing, technical, human
and other resources, as well as greater name recognition and a larger installed
customer base, than we do. This may give these competitors certain advantages,
including the ability to negotiate lower prices on raw materials and components
than those


                                       11



available to us. In addition, many of our large competitors offer customers
broader product lines, which provide more comprehensive solutions than our
current offerings. We expect that other companies will also enter markets in
which we compete. Increased competition could result in significant price
competition, reduced profit margins or loss of market share. We can give no
assurance that we will be able to compete successfully with existing or future
competitors or that the competitive pressures we face will not materially and
adversely affect our business, operating results and financial condition. In
particular, we expect that prices on many of our products will continue to
decrease in the future and that the pace and magnitude of these price decreases
may have an adverse impact on our results of operations or financial condition.

        There has been a trend toward industry consolidation for several years.
We expect this trend toward industry consolidation to continue as companies
attempt to strengthen or hold their market positions in an evolving industry. We
believe that industry consolidation may provide stronger competitors that are
better able to compete. This could have a material adverse effect on our
business, operating results and financial condition.

WE MAY HAVE DIFFICULTY MANAGING OUR BUSINESSES.

        We have grown rapidly in recent years, with revenues increasing from
$88.8 million for the year ended December 31, 1996, to $319.4 million for the
year ended December 31, 2000. Our growth, both internally and through the
acquisitions we have made has placed a significant strain on our financial and
management personnel and information systems and controls. As a consequence, we
must continually implement new and enhance existing financial and management
information systems and controls and must add and train personnel to operate
these systems effectively. Our delay or failure to implement new and enhance
existing systems and controls as needed could have a material adverse effect on
our results of operations and financial condition in the future. Our intention
to continue to pursue a growth strategy can be expected to place even greater
pressure on our existing personnel and to compound the need for increased
personnel, expanded information systems, and additional financial and
administrative control procedures. We can give no assurance that we will be able
to successfully manage operations if they continue to expand.

        Edmund Glazer, our Vice President of Finance and Administration and
Chief Financial Officer was killed on September 11, 2001 in the terrorists'
attack on the World Trade Center. His death has created a void in our management
team that will exist until a suitable replacement or replacements are found.
Until a successor or successors to Mr. Glazer are found and begin performing
duties he previously handled and managed, we may face difficulties in
compiling, reviewing and releasing financial information and this could result
in delays in releasing this information to the public and our meeting deadlines
to file the reports required of a public company. These difficulties could
adversely affect the marketplace's perception of MRV resulting in decreases in
our stock price.


                                       12


WE FACE RISKS FROM OUR INTERNATIONAL OPERATIONS.

        International sales have become an increasingly important segment of our
operations. The following table sets forth the percentage of our total net
revenues from sales to customers in foreign countries for the periods indicated
below:



                                                                                 Nine months ended
                                                    Year ended December 31,        September 30,
                                                  -----------------------------  -----------------
                                                   1998      1999       2000       2000     2001
                                                  -------  ---------  ---------  --------  -------
                                                                              
Percent of total revenue from foreign sales        59%        58%        63%        61%       64%



        We have companies and offices in, and conduct a significant portion of
our operations in and from, Israel. We are, therefore, directly influenced by
the political and economic conditions affecting Israel. Any major hostilities
involving Israel, the interruption or curtailment of trade between Israel and
its trading partners or a substantial downturn in the economic or financial
condition of Israel could have a material adverse effect on our operations. In
addition, the recent acquisition of operations in Taiwan and People's Republic
of China has increased both the administrative complications we must manage and
our exposure to political, economic and other conditions affecting Taiwan and
People's Republic of China. Luminent has a large manufacturing facility in the
People's Republic of China in which it manufactures passive fiber optic
components and both Luminent and we make sales of our products in the People's
Republic of China. Our total sales in the People's Republic of China amounted to
approximately $2,733,000 during the year ended December 31, 2000 and $4,836,000
during the nine months ended September 30, 2001. Currently there is significant
political tension between Taiwan and People's Republic of China, which could
lead to hostilities. Risks we face due to international sales and the use of
overseas manufacturing include:

     -  greater difficulty in accounts receivable collection and longer
        collection periods;

     -  the impact of recessions in economies outside the United States;

     -  unexpected changes in regulatory requirements;

     -  seasonal reductions in business activities in some parts of the world,
        such as during the summer months in Europe or in the winter months in
        Asia when the Chinese New Year is celebrated;

     -  certification requirements;

     -  potentially adverse tax consequences;

     -  unanticipated cost increases;

     -  unavailability or late delivery of equipment;

     -  trade restrictions;

     -  limited protection of intellectual property rights;

     -  unforeseen environmental or engineering problems; and


                                       13



     -  personnel recruitment delays.

        The majority of our sales are currently denominated in U.S. dollars and
to date our business has not been significantly affected by currency
fluctuations or inflation. However, as we conduct business in several different
countries, fluctuations in currency exchange rates could cause our products to
become relatively more expensive in particular countries, leading to a reduction
in sales in that country. In addition, inflation or fluctuations in currency
exchange rates in these countries could increase our expenses. The Single
European Currency (Euro) was introduced on January 1, 1999 with complete
transition to this new currency required by January 2002. We have made and
expect to continue to make changes to our internal systems in order to
accommodate doing business in the Euro. Any delays in our ability to be
Euro-compliant could have an adverse impact on our results of operations or
financial condition. Due to numerous uncertainties, we cannot reasonably
estimate at this time the effects a common currency will have on pricing within
the European Union and the resulting impact, if any, on our financial condition
or results of operations.

        To date, we have not hedged against currency exchange risks. In the
future, we may engage in foreign currency denominated sales or pay material
amounts of expenses in foreign currencies and, in that event, may experience
gains and losses due to currency fluctuations. Our operating results could be
adversely affected by currency fluctuations or as a result of inflation in
particular countries where material expenses are incurred.

WE DEPEND ON THIRD-PARTY CONTRACT MANUFACTURERS FOR NEEDED COMPONENTS AND
THEREFORE COULD FACE DELAYS HARMING OUR SALES.

        We outsource the board-level assembly, test and quality control of
material, components, subassemblies and systems relating to our networking
products to third-party contract manufacturers. Though there are a large number
of contract manufacturers that we can use for outsourcing, we have elected to
use a limited number of vendors for a significant portion of our board assembly
requirements in order to foster consistency in quality of the products and to
achieve economies of scale. These independent third-party manufacturers also
provide the same services to other companies. Risks associated with the use of
independent manufacturers include unavailability of or delays in obtaining
adequate supplies of products and reduced control of manufacturing quality and
production costs. If our contract manufacturers failed to deliver needed
components timely, we could face difficulty in obtaining adequate supplies of
products from other sources in the near term. We can give no assurance that our
third party manufacturers will provide us with adequate supplies of quality
products on a timely basis, or at all. While we could outsource with other
vendors, a change in vendors may require significant lead-time and may result in
shipment delays and expenses. Our inability to obtain these products on a timely
basis, the loss of a vendor or a change in the terms and conditions of the
outsourcing would have a material adverse effect on our business, operating
results and financial condition.

WE MAY LOSE SALES IF SUPPLIERS OF OTHER CRITICAL COMPONENTS FAIL TO MEET OUR
NEEDS.

        Our companies currently purchase several key components used in the
manufacture of our

                                       14



products from single or limited sources. We depend on these sources to meet our
needs. Moreover, we depend on the quality of the products supplied to us over
which we have limited control. We have encountered shortages and delays in
obtaining components in the past and expect to encounter shortages and delays in
the future. If we cannot supply products due to a lack of components, or are
unable to redesign products with other components in a timely manner, our
business will be significantly harmed. We have no long-term or short-term
contracts for any of our components. As a result, a supplier can discontinue
supplying components to us without penalty. If a supplier discontinued supplying
a component, our business may be harmed by the resulting product manufacturing
and delivery delays.

OUR INABILITY TO ACHIEVE ADEQUATE PRODUCTION YIELDS FOR CERTAIN COMPONENTS WE
MANUFACTURE INTERNALLY COULD RESULT IN A LOSS OF SALES AND CUSTOMERS.

        We rely heavily on our own production capability for critical
semiconductor lasers and light emitting diodes used in our products. Because we
manufacture these and other key components at our own facilities and these
components are not readily available from other sources, any interruption of our
manufacturing processes could have a material adverse effect on our operations.
Furthermore, we have a limited number of employees dedicated to the operation
and maintenance of our wafer fabrication equipment, the loss of any of whom
could result in our inability to effectively operate and service this equipment.
Wafer fabrication is sensitive to many factors, including variations and
impurities in the raw materials, the fabrication process, performance of the
manufacturing equipment, defects in the masks used to print circuits on the
wafer and the level of contaminants in the manufacturing environment. We can
give no assurance that we will be able to maintain acceptable production yields
and avoid product shipment delays. In the event adequate production yields are
not achieved, resulting in product shipment delays, our business, operating
results and financial condition could be materially adversely affected.

FUTURE HARM COULD RESULT FROM ADDITIONAL ACQUISITIONS.

An important element of our strategy is to review acquisition prospects that
would complement our existing companies and products, augment our market
coverage and distribution ability or enhance our technological capabilities.
Future acquisitions could have a material adverse effect on our business,
financial condition and results of operations because of the following:

     -  possible charges to operations for purchased technology and
        restructuring similar to those incurred in connection with our
        acquisition of Xyplex in 1998;

     -  potentially dilutive issuances of equity securities;

     -  incurrence of debt and contingent liabilities;

     -  incurrence of amortization expenses and impairment charges related to
        goodwill and other intangible assets and deferred compensation charges
        similar to those arising with the acquisitions of Fiber Optic
        Communications, Optronics, Quantum Optech, Jolt and Astroterra in 2000
        (see Recently Issued Accounting Standards);


                                       15



     -  difficulties assimilating the acquired operations, technologies and
        products;

     -  diversion of management's attention to other business concerns;

     -  risks of entering markets in which we have no or limited prior
        experience;

     -  potential loss of key employees of acquired organizations; and

     -  difficulties in honoring commitments made to customers by management of
        the acquired entity prior to the acquisition.

     -  We can give no assurance as to whether we can successfully integrate the
        companies, products, technologies or personnel of any business that we
        might acquire in the future.

WE CANNOT PREDICT THE IMPACT OF POTENTIAL ACTIONS BY THE SEC WITH RESPECT TO OUR
VALUATION METHODOLOGY FOR IN-PROCESS RESEARCH AND DEVELOPMENT RELATED TO
BUSINESS COMBINATIONS.

        Actions and comments from the SEC have indicated it has been reviewing
the valuation methodology of in-process research and development related to
business combinations. We believe we are in compliance with all of the existing
rules and related guidance as applicable to our business operations. However,
the SEC may change these rules or issue new guidance applicable to our business
in the future. There can be no assurance that the SEC will not seek to reduce
the amount of in-process research and development previously expensed by us.
This would result in the restatement of our previously filed financial
statements and could have a material adverse effect on our operating results and
financial condition for periods subsequent to the acquisitions.

IF WE FAIL TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY, WE MAY NOT BE ABLE
TO COMPETE.

        We rely on a combination of trade secret laws and restrictions on
disclosure and patents, copyrights and trademarks to protect our intellectual
property rights. We cannot assure you that our pending patent applications will
be approved, that any patents that may be issued will protect our intellectual
property or that third parties will not challenge any issued patents. Other
parties may independently develop similar or competing technology or design
around any patents that may be issued to us. We cannot be certain that the steps
we have taken will prevent the misappropriation of our intellectual property,
particularly in foreign countries where the laws may not protect our proprietary
rights as fully as in the United States. Any of this kind of litigation,
regardless of outcome, could be expensive and time consuming, and adverse
determinations in any of this kind of litigation could seriously harm our
business.

WE COULD BECOME SUBJECT TO LITIGATION REGARDING INTELLECTUAL PROPERTY RIGHTS,
WHICH COULD BE COSTLY AND SUBJECT US TO SIGNIFICANT LIABILITY.

        From time to time, third parties, including our competitors, may assert
patent, copyright and other intellectual property rights to technologies that
are important to us. We expect we will


                                       16


increasingly be subject to license offers and infringement claims as the number
of products and competitors in our market grows and the functioning of products
overlaps. In this regard, in March 1999, we received a written notice from
Lemelson Foundation Partnership in which Lemelson claimed to have patent rights
in our vision and automatic identification operations, which are widely used in
the manufacture of electronic assemblies. In April 1999, we received a written
notice from Rockwell International Corporation in which Rockwell claimed to have
patent rights in certain technology related to our metal organic chemical vapor
deposition, or MOCVD, processes. In October 1999, we received written notice
from Lucent Technologies, Inc. in which Lucent claimed we have violated certain
of Lucent's patents falling into the general category of communications
technology, with a focus on networking functionality. In October 1999, we
received a written notice from Ortel Corporation, which has since been acquired
by Lucent, in which Ortel claimed to have patent rights in certain technology
related to our photodiode module products. In January 2001, we were advised that
Lucent had assigned certain of its rights and claims to Agere Systems, Inc.,
including the claim made on the Ortel patent. To date, we have not been
contacted by Agere regarding this patent claim. In July 2000, we received
written notice from Nortel Networks, which claimed we violated Nortel's patent
relating to technology associated with local area networks. In May 2001, we
received written notice from IBM, which claims that several of our optical
components and Internet infrastructure products make use of inventions covered
by certain patents claimed by IBM. We are evaluating the patents noted in the
letters. Aggregate net sales potentially subject to the foregoing claims
amounted to approximately 30% of our total sales during the year ended December
31, 2000 and 26% of our total sales during the nine months ended September 30,
2001. Others' patents, including Lemelson's, Rockwell's, Lucent's, Agere's,
Nortel's and IBM's, may be determined to be valid, or some of our products may
ultimately be determined to infringe the Lemelson, Rockwell, Lucent, Agere,
Nortel or IBM patents, or those of other companies.

        Lemelson, Rockwell, Lucent, Agere, Nortel or IBM, or other companies may
pursue litigation with respect to these or other claims. The results of any
litigation are inherently uncertain. In the event of an adverse result in any
litigation with respect to intellectual property rights relevant to our products
that could arise in the future, we could be required to obtain licenses to the
infringing technology, to pay substantial damages under applicable law, to cease
the manufacture, use and sale of infringing products or to expend significant
resources to develop non-infringing technology. Licenses may not be available
from third parties, including Lemelson, Rockwell, Lucent, Ortel, Nortel or IBM,
either on commercially reasonable terms or at all. In addition, litigation
frequently involves substantial expenditures and can require significant
management attention, even if we ultimately prevail. Accordingly, any
infringement claim or litigation against us could significantly harm our
business, operating results and financial condition.

OUR BUSINESS MAY BE ADVERSELY AFFECTED BY PENDING PATENT LITIGATION.

         In December 1996, Datapoint Corporation brought an action against
NBase Communications, Inc., one of our subsidiaries, and other companies,
alleging infringement of two of Datapoint's patents related to local area
networks, or LANs, more particularly to claimed improved LANs which provide
interoperatively combined with additional enhanced capability and/or which
provide multiple different operational capabilities. The other defendants
include Dayna Communications, Inc., Sun Microsystems, Inc., Adaptec, Inc.,
International Business Machines Corporation, Lantronix and SVEC America
Computer Corporation. Intel and Cisco Systems have also had actions brought
against them by Datapoint with respect to the same two patents. We are
cooperating with several of these companies in pursuit of common defenses and
believe we have meritorious defenses to this action. Aggregate net sales of our
switching and router products potentially subject to Datapoint's patent claims
amounted to approximately 42%, 37% and 25% of our net sales during the years
ended December 31, 1998, 1999 and 2000 and approximately 21% of our net sales
during the nine months ended September 30, 2001. If a conclusion unfavorable to
us is reached, Datapoint's claim could materially and adversely affect our
business, operating results and financial condition.

IN THE FUTURE, WE MAY INITIATE CLAIMS OR LITIGATION AGAINST THIRD PARTIES FOR
INFRINGEMENT OF OUR PROPRIETARY RIGHTS TO PROTECT THESE RIGHTS OR TO DETERMINE
THE SCOPE AND VALIDITY OF OUR PROPRIETARY RIGHTS OR THE PROPRIETARY RIGHTS OF
COMPETITORS. THESE CLAIMS COULD RESULT IN COSTLY LITIGATION AND THE DIVERSION OF
OUR TECHNICAL AND MANAGEMENT PERSONNEL.

        Necessary licenses of third-party technology may not be available to us
or may be very expensive, which could adversely affect our ability to
manufacture and sell our products. From time to time we may be required to
license technology from third parties to develop new


                                       17



products or product enhancements. We cannot assure you that third-party licenses
will be available to us on commercially reasonable terms, if at all. The
inability to obtain any third-party license required to develop new products and
product enhancements could require us to obtain substitute technology of lower
quality or performance standards or at greater cost, either of which could
seriously harm our ability to manufacture and sell our products.

WE ARE DEPENDENT ON CERTAIN MEMBERS OF OUR SENIOR MANAGEMENT.

        We are substantially dependent upon Dr. Shlomo Margalit, our Chairman of
the Board of Directors and Chief Technical Officer, and Mr. Noam Lotan, our
President and Chief Executive Officer. The loss of the services of either of
these officers could have a material adverse effect on us. We have entered into
employment agreements with Dr. Margalit and Mr. Lotan and are the beneficiary of
key man life insurance policies in the amounts of $1.0 million each on their
lives. However, we can give no assurance that the proceeds from these policies
will be sufficient to compensate us in the event of the death of either of these
individuals, and the policies are not applicable in the event that either of
them becomes disabled or is otherwise unable to render services to us.

OUR BUSINESS REQUIRES US TO ATTRACT AND RETAIN QUALIFIED PERSONNEL.

        Our ability to develop, manufacture and market our products, run our
companies and our ability to compete with our current and future competitors
depends, and will depend, in large part, on our ability to attract and retain
qualified personnel. Competition for executives and qualified personnel in the
networking and fiber optics industries is intense, and we will be required to
compete for that personnel with companies having substantially greater financial
and other resources than we do. To attract executives, we have had to enter into
compensation arrangements, that have resulted in substantial deferred
compensation charges and adversely affected our results of operations. We may
enter into similar arrangements in the future to attract qualified executives,
including a new executive or executives to assume the duties previously handled
and managed by Edmund Glazer, our recently deceased Vice President of Finance
and Administration and Chief Financial Officer. If we should be unable to
attract and retain qualified personnel, our business could be materially
adversely affected. We can give no assurance that we will be able to attract and
retain qualified personnel.

ENVIRONMENTAL REGULATIONS APPLICABLE TO OUR MANUFACTURING OPERATIONS COULD LIMIT
OUR ABILITY TO EXPAND OR SUBJECT US TO SUBSTANTIAL COSTS.

        We are subject to a variety of environmental regulations relating to the
use, storage, discharge and disposal of hazardous chemicals used during our
manufacturing processes. Further, we are subject to other safety, labeling and
training regulations as required by local, state and federal law. Any failure by
us to comply with present and future regulations could subject us to future
liabilities or the suspension of production. In addition, these kinds of
regulations could restrict our ability to expand our facilities or could require
us to acquire costly equipment or to incur other significant expenses to comply
with environmental regulations. We cannot assure you that these legal
requirements will not impose on us the need for additional capital expenditures
or


                                       18



other requirements. If we fail to obtain required permits or otherwise fail to
operate within these or future legal requirements, we may be required to pay
substantial penalties, suspend our operations or make costly changes to our
manufacturing processes or facilities.

IF WE FAIL TO ACCURATELY FORECAST COMPONENT AND MATERIAL REQUIREMENTS FOR OUR
MANUFACTURING FACILITIES, WE COULD INCUR ADDITIONAL COSTS OR EXPERIENCE
MANUFACTURING DELAYS.

        We use rolling forecasts based on anticipated product orders to
determine our component requirements. It is very important that we accurately
predict both the demand for our products and the lead times required to obtain
the necessary components and materials. Lead times for components and materials
that we order vary significantly and depend on factors such as specific supplier
requirements, the size of the order, contract terms and current market demand
for the components. For substantial increases in production levels, some
suppliers may need six months or more lead time. If we overestimate our
component and material requirements, we may have excess inventory, which would
increase our costs. If we underestimate our component and material requirements,
we may have inadequate inventory, which could interrupt our manufacturing and
delay delivery of our products to our customers. Any of these occurrences would
negatively impact our net sales.

        Current softness in demand and pricing in the communications market have
necessitated a review of our inventory, facilities and headcount. As a result,
we and Luminent recorded in the nine months ended September 30, 2001, a one-time
charge, to write down inventory realizable value and inventory purchase
commitments of approximately $29.4 million.

WE ARE AT RISK OF SECURITIES CLASS ACTION OR OTHER LITIGATION THAT COULD RESULT
IN SUBSTANTIAL COSTS AND DIVERT MANAGEMENT'S ATTENTION AND RESOURCES.

        In the past, securities class action litigation has been brought against
a company following periods of volatility in the market price of its securities.
Due to the volatility and potential volatility of our stock price or the
volatility of Luminent's stock price following its initial public offering, we
may be the target of securities litigation in the future. Additionally, while
Luminent and we informed investors that we were under no obligation to, and
might not, make the distribution to our stockholders of our Luminent common
stock and that we could and might eliminate public ownership of Luminent through
a short-form merger with us, our decisions to abandon our distribution of
Luminent's common stock to our stockholders or to eliminate public ownership of
Luminent's common stock through the merger of Luminent into one of our
wholly-owned subsidiaries may result in securities or other litigation.
Securities or other litigation could result in substantial costs and divert
management's attention and resources.

DEPENDING ON OUR FUTURE ACTIVITIES OR AS A RESULT OF THE POSSIBLE SALE OF ONE OR
MORE OF OUR PORTFOLIO COMPANIES, WE COULD BE FORCED TO INCUR SIGNIFICANT COSTS
TO AVOID INVESTMENT COMPANY STATUS AND MAY SUFFER ADVERSE CONSEQUENCES IF DEEMED
TO BE AN INVESTMENT COMPANY.

        In the past through 2000, we embarked upon a business strategy of
creating, acquiring and managing companies in the optical technology and
Internet infrastructure areas, with a view toward creating equity growth by
operating or investing in these companies and then potentially spinning them
off, taking them public or selling them or our interest in them. If this
strategy proved successful, we were concerned that we might incur significant
costs to avoid investment company status and would suffer other adverse
consequences if deemed to be an investment company under the Investment Company


                                       19



Act of 1940. The Investment Company Act of 1940 requires registration for
companies that are engaged primarily in the business of investing, reinvesting,
owning, holding or trading in securities. A company may be deemed to be an
investment company if it owns "investment securities" with a value exceeding 40%
of the value of its total assets (excluding government securities and cash
items) on an unconsolidated basis, unless an exemption or safe harbor applies.
Securities issued by companies other than majority-owned subsidiaries are
generally counted as investment securities for purposes of the Investment
Company Act. Investment companies are subject to registration under, and
compliance with, the Investment Company Act unless a particular exclusion or
safe harbor provision applies. If we were to be deemed an investment company, we
would become subject to the requirements of the Investment Company Act. As a
consequence, we would be prohibited from engaging in business or issuing our
securities as we have in the past and might be subject to civil and criminal
penalties for noncompliance. In addition, certain of our contracts might be
voidable.

        As a result of the current economic slowdown in the communications
industry generally and the fiber optic components industry particularly, we have
abandoned plans to spin-off Luminent, one of our subsidiaries, and withdrawn the
initial public offering of Optical Access, another of our subsidiaries. The
economic slowdown and its consequences has caused us reevaluate our strategy and
to focus currently on holding and operating our existing businesses. This
current focus makes it less likely that we would attain investment company
status. However, if economic and market conditions recover to the point at which
they existed prior to the fourth quarter of 2000, we may return to our prior
strategy which, depending on future events, might again subject us to the
potential risks associated with investment company status, including
registration as an investment company.

        Moreover, although our portfolio of investment securities currently
comprises substantially less than 40% of our total assets, fluctuations in the
value of these securities or of our other assets as a result of future economic
conditions or events, or, more likely, the sale of one or more of companies in
exchange for the securities of the purchaser, may cause this limit to be
exceeded. For example, while we have no plans to sell all or any portion of
Luminent to a third party after the merger, we are periodically contacted by
third parties regarding potential transactions and, depending on the proposal,
could complete a sale if we determine that it would be in our best interest and
those of our stockholders. In any case, where our investment securities
resulting from a sale of Luminent or another of our companies or otherwise were
in excess of the 40% limit unless an exclusion or safe harbor was available to
us, in that case, we would have to attempt to reduce our investment securities
as a percentage of our total assets. This reduction could be attempted in a
number of ways, including the disposition of investment securities and the
acquisition of non-investment security assets. If we were required to sell
investment securities, we may sell them sooner than we otherwise would. These
sales may be at depressed prices and we may never realize anticipated benefits
from, or may incur losses on, these investments. We may be unable to sell some
investments due to contractual or legal restrictions or the inability to locate
a suitable buyer. Moreover, we may incur tax liabilities when we sell assets. We
may also be unable to purchase additional investment securities that may be
important to our operating strategy. If we decide to acquire non-investment
security assets, we may not be able to identify and acquire suitable assets and
businesses or the terms on which we are able to acquire these assets may be
unfavorable. The mere existence of these issues could cause us to forego a
transaction, which might otherwise have been beneficial to us.

DELAWARE LAW AND OUR ABILITY TO ISSUE PREFERRED STOCK MAY HAVE ANTI-TAKEOVER
EFFECTS THAT COULD PREVENT A CHANGE IN CONTROL, WHICH MAY CAUSE OUR STOCK PRICE
TO DECLINE.

        We are authorized to issue up to 1,000,000 shares of preferred stock.
This preferred stock may be issued in one or more series, the terms of which may
be determined at the time of issuance by the board of directors without further
action by stockholders. The terms of any series of preferred stock may include
voting rights (including the right to vote as a series on particular matters),
preferences as to dividend, liquidation, conversion and redemption rights and
sinking fund provisions. No preferred stock is currently outstanding. The
issuance of any preferred stock could materially adversely affect the rights of
the holders of our common stock, and therefore, reduce the value of our common
stock. In particular, specific rights granted to future holders of preferred
stock could be used to restrict our ability to merge with, or sell our assets
to, a third


                                       20



party and thereby preserve control by the present management.

We are also subject to the anti-takeover provisions of Section 203 of the
Delaware General Corporation Law, which prohibit us from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interested stockholder
unless the business combination is approved in the manner prescribed under
Section 203. These provisions of Delaware law also may discourage, delay or
prevent someone from acquiring or merging with us, which may cause the market
price of our common stock to decline.


                                       21




                                 USE OF PROCEEDS

        We will not receive any proceeds from the sales of shares of common
stock by the selling stockholder.

                                 DIVIDEND POLICY

        We have never declared or paid cash dividends on our common stock since
our inception. We currently intend to retain all of our earnings, if any, for
use in the operation and expansion of our businesses and do not intend to pay
any cash dividends to stockholders in the foreseeable future.



                                       22




                           PRICE RANGE OF COMMON STOCK

        Our common stock is traded in the over-the-counter market and has been
included in the Nasdaq National Market since February 28, 1994 under the symbol
"MRVC." The following table sets forth the high and low closing sale prices of
our common stock for the periods indicated as reported by the Nasdaq National
Market. The prices have been adjusted to give retroactive effect to the
two-for-one stock split effected on May 11, 2000.



                                                          HIGH         LOW
                                                          ----         ---
1999
- ----
                                                                
First Quarter                                            $ 4.94       $2.97
Second Quarter                                             7.03        2.97
Third Quarter                                             12.41        6.31
Fourth Quarter                                            32.81        9.72

2000
- ----

First Quarter                                            $95.25      $25.88
Second Quarter                                            67.25       23.44
Third Quarter                                             80.38       45.31
Fourth Quarter                                            49.25       11.06

2001
- ----

First Quarter                                            $21.38       $6.22
Second Quarter                                            12.90        5.38
Third Quarter                                              8.79        2.43
Fourth Quarter                                             5.75        2.76

2002
- ----

First Quarter (through January 15, 2002)                 $ 5.08       $4.23



        As of December 31, 2001, there were 77,615,642 shares of our common
stock outstanding excluding up to 5,160,000 issuable as a result of the
consummation of the short-form merger of Luminent on December 28, 2001.

        On January 15, 2002, the last reported sales price of the Common Stock
was $4.23 per share as reported by the Nasdaq National Market.

                                       23





                               SELLING STOCKHOLDER

        The following table sets forth certain information regarding the
beneficial ownership of shares of common stock by the selling stockholder as of
September 30, 2001. The term "selling stockholder" also includes any
transferees, pledgees, donees, or other successors in interest to the selling
stockholder named in the table below. To the extent required, we will name any
additional selling stockholder(s) in a supplement to this prospectus.
Information in the table concerning the selling stockholder and the shares it
may offer from time to time under this prospectus is based on information
provided to MRV by such stockholder. Because the selling stockholder may offer
all or some of the shares pursuant to this prospectus, and to our knowledge
there are currently no agreements, arrangements or understandings with respect
to the sale of any of the shares that may be held by the selling stockholder, we
can give no estimate as to the amount of shares that will be held by the selling
stockholder after completion of this offering.



                                                      Number of shares           Number of shares
                                                        beneficially             being offered by
                                                        owned prior to             the selling
        Name of Selling Stockholder                     this offering              stockholder
        ---------------------------                   ----------------           ----------------
                                                                           
        Canadian Imperial Holdings Inc.*                  2,947,889                  2,947,889


        ----------
     *  Of the shares being registered for resale by Canadian Imperial Holdings
        Inc., 341,889 shares were acquired by the selling stockholder from
        Tellaire Corporation, which received them from MRV in December 2000 in
        connection with its investment in Tellaire. MRV received from Tellaire
        5,775,149 shares of Series B Convertible Preferred Stock, $.001 par
        value per share of Tellaire, representing approximately 32% of
        Tellaire's outstanding capital stock at the date of the investment. The
        remaining shares were issued by MRV directly to Canadian Imperial
        Holdings Inc. in a private placement completed in June 2001 for which
        MRV received cash proceeds aggregating approximately $20.5 million.

        The information concerning the selling stockholder may change from time
to time and will be set forth in supplements to this prospectus as required.

        MRV is paying all expenses incident to the registration of the offer and
sale of the shares of common stock to the public pursuant to this prospectus
other than selling commissions and fees.

        Except as noted above, the selling stockholder has not had any material
relationship with MRV during the past three years.



                                       24





                              PLAN OF DISTRIBUTION

        We are registering the common stock covered by this prospectus for the
selling stockholder. To the extent required, we will identify any additional
selling stockholder(s) in a supplement to this prospectus. As used in this
prospectus, "selling stockholder" refers to any such additional selling
stockholder(s) and singular terms (such as "is" or "its") include the plural
(such as "are" or "their"), if applicable.

        The selling stockholder will act independently of us in making decisions
with respect to the timing, manner and size of each sale. The selling
stockholder may sell the common stock on The Nasdaq National Market, in the
over-the-counter market or in private transactions, at market prices prevailing
at the time of sale, at prices related to the prevailing market prices, or at
negotiated prices.

        In addition, the selling stockholder may sell some or all of its common
stock through:

     -  a block trade in which a broker-dealer may resell a portion of the
        block, as principal, in order to facilitate the transaction;

     -  purchases by a broker-dealer, as principal, and resale by the
        broker-dealers for their account; or

     -  ordinary brokerage transactions and transactions in which a broker
        solicits purchasers.

        The selling stockholder may enter into hedging transactions with respect
to its shares. For example, the selling stockholder may:

     -  enter into transactions involving short sales of the common stock by
        broker-dealers;

     -  sell common stock short itself and redeliver such shares to close out
        their short positions;

     -  enter into option or other types of transactions that require the
        selling stockholder to deliver common stock to a broker-dealer, who will
        then resell or transfer the common stock under this prospectus; or

     -  loan or pledge the common stock to a broker-dealer, who may sell the
        loaned shares or, in the event of default, sell the pledged shares.

        The selling stockholder may negotiate and pay broker-dealers
commissions, discounts or concessions for their services. Broker-dealers engaged
by the selling stockholder may allow other broker-dealers to participate in
resales. However, the selling stockholder and any broker-dealers involved in the
sale or resale of the common stock may qualify as "underwriters" within the
meaning of the Securities Act of 1933. In addition, the broker-dealers'
commissions, discounts or concession may qualify as underwriters' compensation
under the Securities Act of 1933. If the selling stockholder or any
broker-dealers qualifies as "underwriters," they will be subject to the
prospectus delivery requirements of the Securities Act of 1933.


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        In addition to selling its common stock under this prospectus, the
selling stockholder may:

     -  indemnify any broker-dealer or agent against certain liabilities related
        to the selling of the common stock, including liabilities arising under
        the Securities Act of 1933;

     -  transfer their common stock in other ways not involving market makers or
        established trading markets, including directly by gift, distribution,
        or other transfer; or

     -  sell their common stock under Rule 144 of the Securities Act of 1933
        rather than under this prospectus, if the transaction meets the
        requirements of Rule 144.

        When a particular offering is made, if required, we will distribute to
you a prospectus supplement. This supplement will set forth the name(s) of the
selling stockholder(s), the aggregate amount and type of shares being offered,
the number of such shares owned before and after the completion of any such
offering, and, to the extent required, the terms of the offering, including the
name or names of any underwriters, broker-dealers or agents, any discounts,
commissions and other terms constituting compensation from the selling
stockholder(s) and any discounts, commissions or concessions allowed or
reallowed or paid to broker-dealers. Any underwriters, brokers, dealers or
agents who participate in any sale of the shares may also perform services for
our affiliates or us.

        All expenses of the registration of the shares will be paid by us,
including, without limitation, all registration and filing fees, printing
expenses, expenses of compliance with blue sky laws, fees and disbursements of
our counsel and expenses of any audits incidental to this registration. The
selling stockholder will pay expenses related to any sales commissions or
underwriting discounts and fees and any expenses of its counsel incurred in
connection with the sale of shares through this prospectus.

        We have agreed to indemnify the selling stockholder against certain
liabilities, including liabilities under the Securities Act.


                                       26





                                  LEGAL MATTERS

        The validity of the common stock offered hereby has been passed upon for
MRV by Kirkpatrick & Lockhart LLP, Los Angeles, California.

                                     EXPERTS

        The consolidated financial statements and schedule of MRV
Communications, Inc. and Luminent, Inc. included in their Form 10-K/A and 10-K,
respectively, incorporated by reference in this registration statement, to the
extent and for the periods indicated in their reports, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.

                       WHERE YOU CAN FIND MORE INFORMATION

        We have filed with the Securities and Exchange Commission a registration
statement on Form S-3, of which this prospectus is a part, under the Securities
Act with respect to the shares of common stock offered hereby. This prospectus
does not contain all of the information included in the registration statement.
Statements in this prospectus concerning the provisions of any document are not
necessarily complete. You should refer to the copies of these documents filed as
exhibits to the registration statement or otherwise filed by us with the SEC for
a more complete understanding of the matter involved. Each statement concerning
these documents is qualified in its entirety by such reference.

        We are subject to the informational requirements of the Exchange Act
and, accordingly, file reports, proxy statements and other information with the
SEC. The SEC maintains a website that contains reports, proxy statements and
other information regarding us. The address of the SEC website is
http://www.sec.gov. Copies of our reports, proxy statements and other
information also may be inspected and copied at the public reference facilities
maintained by the SEC at:

Judiciary Plaza                                          Citicorp Center
Room 1024                                                500 West Madison Street
450 Fifth Street, N.W.                                   Suite 1400
Washington, D.C. 20549                                   Chicago, IL 60661

Copies of these materials can also be obtained by mail at prescribed rates from
the Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington,
D.C. 20549 or by calling the SEC at 1-800-SEC-0330. Our reports, proxy
statements and other public filings may also be inspected at:

                 The National Association of Securities Dealers
                               1735 K Street, N.W.
                             Washington, D.C. 20006



                                       27


                      INFORMATION INCORPORATED BY REFERENCE

        The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
part of this prospectus, and later information that we file with the SEC will
automatically update and supersede this information. We incorporate by reference
the documents listed below. We also incorporates by reference any future filings
made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until the selling stockholder sells all its shares.

     -  MRV's Annual Report on Form 10-K for the year ended December 31, 2000
        filed with the SEC on April 17, 2001 as amended by MRV's Form 10-K/A
        filed with the SEC on December 27, 2001;

     -  MRV's Quarterly Reports on Forms 10-Q: for the quarter ended March 31,
        2001 filed with the SEC on May 15, 2001; for the quarter ended June 30,
        2001 filed with the SEC on August 16, 2001, as amended by MRV's Form
        10-Q/A filed with the SEC on December 27, 2001; and for the quarter
        ended September 30, 2001 filed with the SEC on November 14, 2001.

     -  MRV's Current Reports on Form 8-K filed with the SEC on September 17,
        2001, October 1, 2001 and January 8, 2002.

     -  The description of the Common Stock contained in MRV's Registration
        Statement on Form 8-A filed with the SEC on June 8, 1992, as amended by
        its Form 8-A/A filed with the SEC on February 24, 1994, including any
        amendment or report filed for the purpose of updating such description.

        You may request a copy of these filings, at no cost, by writing our
Investor Relations Department us at the following address: MRV Communications,
Inc., 20415 Nordhoff Street, Chatsworth, California 91311, or by fax at (818)
773-0906 or by telephone at (818) 773-0900. You should rely only on the
information incorporated by reference or provided in this prospectus or any
supplement. MRV has not authorized anyone else to provide you with different
information. The selling stockholder will not make an offer of these shares in
any state that does not permit the offer. You should not assume that the
information in this prospectus or any supplement is accurate as of any date
other than the date of those documents.





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