"They need to have 3 digit growth for a couple of years."
I'm curious how you see this as possible. Please convince me!
WIND has just lowered Tornado II's price. Whereas the unit volumes for some royalty generating possibilities are potentially enormous, this will contribute handsomely to the bottom line. Even the potential we can now see (cable modems, digital cameras, I2O, set top boxes) will not be fully realized for several years. Do you see triple digit growth for Tornado II as possible? Professional services?
Revenue growth for the industry is pegged at about 35%, a far cry from 100+ %.
I'd be quite happy with consistent 40% revenue growth from product sales. Because royalties are increasing as a percentage of sales, the net will improve more dramatically, especially if I2O starts to kick in in a meaningful way. Service revenue may increase faster than product revenue because of the vertical professional service solutions model, but those revenues won't carry nearly the same margins.
I believe that until this last quarter, with several PR disasters, WIND had let its performance do the talking. I liked this approach, but it relied on absolute consistency. In fact, they did come through every time until last quarter. As soon as they missed, the punishment was immediate and severe. I think that they've learned a lesson. They need to manage expectations and perceptions as well as numbers.
I think that their PR will be a bit more proactive (witness internet talk), and their new CEO will consider the stock a valuable currency. Of course, in any case, there must be a return to reliable performance. Can't cancel conferences, etc. |
