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Technology Stocks : Wind River going up, up, up!

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To: lkj who wrote (5430)	6/10/1999 2:51:00 PM
From: James Connolly	Read Replies (3) of 10309

Then why even invest in such a company, I2O? Ikj Yes, it is possible that WIND's current price is justified by I2O alone. WIND gets about $1.50 for every I2O i960 or StrongARM chip which is shipped. The question now is what sort of numbers are we talking about. The number are very large indeed. I2O is already shipping mainly in Intelligent RAID. At the last CC it was announced that one of the major PC/server OEM's was ready to ship I2O enabled high end PC's and servers in quantity starting mid year (about now). Presumably if one OEM starts then the rest will follow soon afterwards. I2O will in time spread to all PC's and peripheral devices. The numbers are very large. It will also be used in NGIO and Future I/O. It is interesting to compare WIND and Rambus. Rambus has its Intel backed high speed memory technology which will start to ship around Sep of this year. Rambus gets about a 1-2% royalty on the selling price of any memory which is shipped using its technology. Rambus is therefore in-line to get a royalty stream which is about 1-2% of the $50 Billion memory market (assuming 100% market penetration). Rambus has a PE of about 200 yet WIND has a PE of about 25-30. WIND's product is already shipping and is expected to ramp aggressively in the very near future (mid year). The reason Rambus has such a high PE is obvious. People expect it to earn huge amounts of money in the future. Rambus has the advantage that it has a very simple story. Technology backed by Intel, soon to be in PC's/servers, lots of royalties. WIND on the other hand is far more complicated. I2O is just one of many projects WIND is involved with. I2O to some extent (IMHO) has got lost in the complexity of the company. Also, memory is far easier to understand than I2O. Memory prices as you know decline very rapidly over time, while the number of I2O devices will only increase over time. If you extrapolate this idea over time it is entirely possible that at some point in the future WIND's I2O product could have a comparable dollar content in PC/servers as does Rambus. Regards JC.

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