COMPANY SPINS OFF SUCCESSFUL DIVISIONS.

Byline: Jason Z. Cohen Staff Writer

CHATSWORTH - For the second time this month, MRV Communications said it plans to spin off a portion of its business into an independent company.

Following a strong quarter and its acquisition of three optics firms, MRV said it would spin off its Optical Access division to form a company it has named Luminent Inc.

To form Luminent, the division will be combined with recently purchased Fiber Optic Communications Inc. and two of the companies whose purchases were announced Thursday - laser diode and transceiver maker Optronics International Corp. and optical coatings maker Quantum Optech Inc.

MRV's plans, announced Thursday, are to acquire the two Taiwanese companies plus Jerusalem-based Jolt Ltd., maker of wireless optical communications products. MRV reported its widening net losses as the result of its many acquisitions and developing businesses.

Investors reacted favorably, sending MRV's shares higher by 11.75 percent to close at $68.94 per share Friday.

The acquisition of OIC and QOI was specifically intended to give Luminent the capability to manufacture components used in its products, MRV Chief Executive Officer Noam Lotan said.

The company has made a practice of spinning off successful divisions into independence.

Spinoffs include router makers Zuma Networks and Charlotte's Networks, communications infrastructure maker Zaffire Inc., business-to-business service provider Hyperchannel and optical components companies RedC Networks and Optical Crossing Inc.

Its motive in doing so is to maintain the entrepreneurial spirit that exists in small start-up companies, said analyst Chet White of First Security Van Kasper, who tracks MRV's stock.

``You get people who are more focused, and you also get people who are more motivated,'' White said. ``They have ownership. They'll work harder because there will be equity incentive to work.''

The newest spinoff, Luminent, will be well-positioned to become a leader in fiber-optic network components, White said. The company will have the ability to offer several components in a complete package, he said.

``That's an important kind of cost efficiency the leaders need to have,'' White said.

The acquisitions also give MRV and its spinoffs additional manufacturing capacity, White said.

Capacity is becoming an increasingly critical issue, Lotan said, for demand for parts such as lasers outpaces the industry's ability to supply them.