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Technology Stocks : Wind River going up, up, up!
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To: peter grossman who wrote (551)2/24/1997 11:20:00 PM
From: Michael Greene   of 10309
 
Peter, I cannot suggest a good entry point. I have been following and buying WIND since shortly after its IPO in 1993 and every purchase was difficult because it always seemed too expensive. In retrospect just swallowing hard and putting my money down rather than waiting for the right price has always been the right decision with this stock. This is contrary to my normal behavior and it has been the constantly improving story at WIND coupled with my strong conviction that this company will be growing rapidly for a number of years, not quarters, that spurred me to do this. However, I have not given any thought to buying shares in quite a while since the size of my present holding would fail any prudent man rule.

Although I have never felt stronger than I do now about the positive long term prospects for Wind River if someone said that the price could fall 50% or more in the near term from its current level I would not argue with him. For a stock at this valuation just a substantial general market decline or a tech stock rout or a quarterly numbers disappointment would be enough to do this. This is only a buy today for a long term investor who believes that WIND is going to be a leading, if not dominant, player in the embedded field for a number of years into the future resulting in sustained high growth rates. It looks to me like WIND is emerging from the pack as number one and has a realistic shot at becoming the dominant player in this fast growing area. Given the economics of software companies this should more than justify the current price and richly reward the patient long term investor. In the short term who knows? Traders should probably look elsewhere.

If you believe the analysts numbers going forward for the next year you should not buy WIND. Both H&Q and Wessels, Arnold are forecasting a slowdown in the earnings growth rate in the current 1998 fiscal year to about the mid 20's by the fourth quarter. This is in sharp contrast to the analysis of unfolding events as interpreted on this thread. I for one believe that as the I2O revenue stream is added to the current runtime license revenue ramp up the earnings growth rate will pick up somewhat in the second half not drop significantly. The analysts have been consistently playing catch up for the past couple of years and it seems to me that this is going to continue to be the case throughout the current year.
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