Great things could happen to WIND during 1997. Here are my guesses about what we can look forward to.
1. Tired of all the fuss about future possibilites? I2O should take off in 1997 - enough to add noticeably to run-time revenues. You know, the revenues that go straight to Pre-Tax Earnings.
2. Oracle's 2nd generation NCOS should shake a few trees in the first half of 1997, making news and creating interest from mid-year on. The news should highlight interesting partnerships involving ORCL, SUNW and other big players such as major PC manufacturers and/or Japanese Consumer Electronic companies. As the enormous scope of Oracle's NCOS become clear, expect WIND to benefit in stock price and design wins. Early versions of serious NCOS will be targeted to corporate intranets and should begin appearing late in 1997. Simple (Java, Xactive and HTML only) consumer versions of the NCOS may appear much earlier than the ultimate NCOS, say in 1998. The big bucks for WIND should begin in 1998.
3. An endless number of Internet Appliances will begin to appear, particularly in niche (high margin) markets. To get quickly off the ground, these devices will target special servers accessible through the Internet, and will use Java only as a programming preference, not as a mandatory way to implement client-server processing. This is the advantage of niche markets - the developer can control both the server and the client side, so language choice is not limited. Lots of partnerships here, too.
4. Digital TV/Web access will begin to emerge in large numbers, mainly through cable modems in various form factors. WIND is a major player in cable modems, thanks to HP, Hyundai Electronics of America, Bay Networks, 3Com, OpenTV, etc. However, DVD, not VOD, will be the multimedia standout in 1997. While WIND probably will not be involved in 1st generation DVD players, WIND will be a big player when set-top boxes begin to emerge in numbers toward the turn of the Century, providing: local and remote DVD capability (the ultimate standard for VOD), Digital Broadcast, and Network Computing which encompasses WWW browsing, video-type games and serious computing particularly attractive to client-server computing.
5. Wireless utilization of RTOS' will skyrocket in 1997, guaranteed to happen on the infrastructure side, but also expected, and where the numbers gets gigantic, on the client side. The wireless sector disappointed investors in 1996, but this should turn around in 1997, as the PCS roll-outs explode, and data applications start to become common. Recently, Ericsson stated that wireless is adding 3.5 million new subscribers world-wide each month. Within six months virtually all analogue wireless devices will be out of production. As wireless goes completely digital, CDMA is beginning to make its mark and will quickly garner a meaningful market share, if not dominate. While WIND can play in the GSM ballpark as well as anyone, it has a competitive advantage in the CDMA arena - thanks to its strategic relationship with QualComm. WIND has a strong competitive advantage on the infrastructure side, not only due to the QualComm relationship, but because of its deep penetration in telephony and networking equipment companies.
6. Enormous implications, but not yet revenues, of the automobile sector will become more visible and exciting in 1997. Not only will GM be starting production on the long-awaited "Model Year 1998 diesel vehicles", but we should begin to hear more about GM electronic transmissions and gasoline vehicle engine injectors. Also, automobile navigation systems should begin to emerge in the U.S., which will be good for WIND. But the big news in 1997 should come from Europe in the form of an RTOS/LAN standard for automobiles. We hope that WIND emerges as a big player in the standard, along the lines of I2O. (The Japanese also want to standardize the RTOS API in consumer electronics, building off of their DVD success at standardizing, but they are years away from making any meaningful pronouncements.)
7. The military sector will continue its exponential expansion of embedded systems, as always mostly by buying development seats and training for contractors, but also the beginnings of large-scale systems deployment - all well-penetrated, if not dominated, by VxWorks.
8. Telecom/Datacomm and Office Automation will continue to provide plenty of revenues and increasing opportunities for WIND, with an extra spark provided by I2O.
9. Medical Systems applications should continue to expand geometrically, no doubt one of the important areas utilizing wireless data applications.
10. Voice Recognition will continue to be subsumed within telephony in 1997. However, in a few years, VR will become a major driver of embedded systems in most areas of application.
As far as financial issues in 1997, the following are pretty safe bets:
1. Once again I will make the bold prediction that analysts estimates for FY 98 will be raised as the year progresses.
2. I would like to see the stock price bump its way up about 40% during the year, ending the 1997 at about $70. Of course, the market likes to do things its own way, so I have no idea what the stock price is going to do during the year.
3. Some of the news that might be reported in connection with many of the kinds of events predicted above could rightly elevate the stock considerably beyond $70 (after all the current Intrinsic Value of the stock is far greater even than $70).
4. Don't forget that WIND is still sitting on close to $100 million, so one has to expect 1997 will see an acquisition. If one is coming, let's trust WIND avoids the pitfalls that INTS appears to have fallen into with their acquisitions.
5. On any given day WIND could be acquired by a large company finally getting serious about embedded systems. A golfing lawyer friend of mine told me just today (shows how nice East Coast weather is) about IBM's statements about smart refrigerators that will automatically communicate with the manufacturer about needed repairs, informing the owner after all important decisions have been made, including tentatively scheduled service. Now, when a golfing lawyer can quote IBM about embedded systems, it seems to me the word is starting to get out. And when the word does gets out, big things will happen fast.
Allen |
