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Technology Stocks : Wind River going up, up, up!
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To: Allen Benn who wrote (608)3/7/1997 3:09:00 PM
From: F. Foos   of 10309
 
Allen; Re: Run-time revenues
Thanks for the background information pertaining to the rate of growth
of the run-time license revenue as a percentage of total revenue.
The reference point, from the time of the secondary offering, was very
useful to me. Is it fair to assume that run-time license revenue grew
by approximately 55% in FY97 ?

I would expect that the run-time revenue attributable to the I2O would accelerate the rate of change in FY98, though I have no feel for what
the total revenue flow to WIND might be. I recently read a marketing
projection, of Intel-based PC server sales in the Japanese market,
that indicated that sales would rise by an annual rate of 50%, to
about 190,000 servers in 1997. This study expects that the Japanese
PC server sales will be stable, at this growth rate, for a period.
I disagree with the survey on this point.

I expect that I2O will set off an equipment upgrade cycle that will lead to a surge in server sales. One of the WIND representatives, on the conference call, stated that a four-fold increase in CPU utilization was achieved with I2O. They also stated that the number of
transactions processed, also increased. This is probably enough to
induce server upgrade.

The 30% growth last quarter, in Tornado developer licenses implies
that there is room for run-time growth to accelerate. I know that all
developer licensing deals don't have the same run-time revenue
generating potential. I20 would probably have the most and a project
like Pathfinder the least run-time potential. How would you rank the
run-time potential of the other announced deals?

Frank

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