CNBC audio, video and transcript
nasdaq-amex.com
INTERVIEW WITH WIND RIVER SYSTEMS (WIND) CHAIRMAN & CEO JERRY FIDDLER
JUNE 9, 1999
SUMMARY: Fiddler comments on the vast expansion of embedded technology. He says Wind River is the forerunner in embedded software technology and market share.
Bill: Software is in everything from digital cameras, PC printers, ATM machines, even traffic lights. The company's now tapped into an exploding industry estimated at $2.3 billion up from $250 million just three years ago. We've received a lot of e-mail from you, about Wind River. The fund managers we have on "stock-picking Friday" on Friday, we decided to bring the man in himself. So by request, here is chairman and founder: Jerry Fiddler, joining us from San Francisco today. Good to see you. Welcome back.
Thank you. Glad to be here.
Bill: The market has gone from $250 million three years ago to $2.3 billion?
I'm not sure --.
Bill: What does that reflect? I mean, that's huge.
Well, you know, increasingly we think of the embedded technology not as a market really, but as a technology. It's really the sum of a lot of markets. And we're in everything from military and aerospace, automotive controls, industrial to some of the newer really exciting markets like Internet infrastructure and Internet appliances and intelligent appliances. So, it's sometimes hard to put a number on that whole thing.
Bill: When you started the company in the '70s, you were in, what, calculators and things like that?
Well, I started the company in '81 as a consulting company. It was literally me in a garage and built a bunch of technology and starting in 1987, we turn that into a product. At that point, it was mostly in, in very large things. In MRI scanners, the world's biggest telescopes. It was in aircraft similarities. These were big things.
Bill: What changed? When did they become more economical to be putting them into smaller things?
Well, I think two things have changed. One is the Internet and the other is Moore's law that continues to make them cheaper and more powerful.
The microprocessor in your digital camera today, something like a Kodak digital camera has a power PC 860, more powerful than the computer in the MRI scanner back in '87, when we started to do that. So, today the applications we're looking at that have the kind of power that need our tools, are very plentiful.
Bill: Now, you're doing battle of sorts with Microsoft, because they want to use the Windows CE, that mini version of the Windows operating system, for things that are, in some cases, using your technology. So, you're doing battle with Microsoft now; yes?
Occasionally. You know, most of the stuff that we're in, we don't see in Microsoft. We're in everything from spaceships, we're inside the mars pathfinder sitting up on Mars, all throughout the infrastructure when you use a telephone or the internet, your voice is going through lots of -- or your data's going through lots of embedded computers called bridges and hubs and routers and switchers and we're certainly not seeing Microsoft in those kinds of things. The places where we may see them is the sort of appliances, the sort of end product of what will hang on the Internet.
Bill: The palm pilot and things like that.
Yeah. And IDC is estimating within a very few years, most of the things connected to Internet won't look like computers and won't be called computers. They'll be called telephones and cameras and all sorts of other things. And I think we'll see Microsoft there, but in the meantime, we're growing very nicely, and we're still far and away the leader in this market, both in terms of technology, market share, and mind share.
Bill: How are your margins? I mean, lately, you know, not lately, but forever prices have come down and everybody scrambles to try and either keep costs down or find new revenue streams to keep the company growing. What's the story with you guys?
Last year operating profit was 29% plus. So, quite healthy.
Bill: Right.
This year -- you know, I think that what's happening now is that the market really is changing. And we're starting to see these new applications, which are really exciting. So, what I would expect to see is very strong continued revenue growth.
Bill: So, you're finding the new revenue streams, but what were profit margins five years ago, do you remember?
Teens, maybe.
Bill: Okay. So, it's actually better than it was.
Oh, yeah. It's definitely improved over time, but I mean, what I would say is I think some of these new markets are going to require investments. So, I think that we'll continue strong profitability. And I think we'll be able to continue earnings coming up, but they might not always rise at the same rate of revenue, just because when we see investment we'll go for it.
These are great markets and great opportunities.
Bill: I'm out of time, but I guess this rush out instead of being a rock guitarist, huh?
This is a lot of fun.
Bill: Thanks, Jerry, nice to see you. Jerry Fiddler, Chairman and Founder of Wind River Systems, joining us from San Francisco. He could have very well have become a rock guitarist instead of founding this company. The stock is far off the high set earlier this year at around $32 per share.
Regards
JC.
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