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Technology Stocks : Wind River going up, up, up!
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To: Mark Brophy who wrote (1829)8/27/1997 12:21:00 AM
From: Richard Karpel   of 10309
 
Joan, take it from someone who has owned both stocks: If you buy RSYS instead of WIND, you're making a big mistake.

As others have stated, RSYS is hardware, WIND is software. RSYS is a "contractor" for OEM customers building embedded products, WIND is an "architect" for the entire embedded industry. While RSYS is building components and baseboards, WIND is establishing the standard operating system for the embedded systems market.

Mark B. made a couple of other misleading points about RSYS that need to be corrected:

1. The huge increase in RSYS revenue from '95 to '96 is almost entirely the result of Radisys' accounting of its purchase of the Intel Multibus I and Multibus II hardware business. In fact, RSYS real growth rate (and gross margins) are much lower than WIND's.

2. It is RSYS -- not WIND -- that is on the wrong side of history. I'm not an expert in this area, but it is my understanding that Radisys' core business -- VME-based embedded systems -- is destined to be replaced by PCI-based embedded systems. (If you would like links to any articles describing this trend, let me know.) As a former RSYS shareholder, one thing I can tell you with certainty is that RSYS management always went out of its way to talk about the company's efforts to move into the PCI-based space.

Three more quick points:

1. Radisys management always seemed a little befuddled to me.

2. Don't listen to me (certaintly don't listen to Mark B.), listen to the stock market: For about two years now, it has been telling us that WIND has a bright future that justifies a high multiple, while RSYS is a risky investment with limited upside. That would explain the extreme variance in valuation between the two companies.

3. While RSYS does own an RTOS (iRMX -- also purchased from Intel) it has very little impact on the company's overall business.
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