Nice post from StockProf of the Raging Bull Thread:
ragingbull.com
>>>WILL THE MARKET BREAK WIND??...
OK ,I couldn't resist the pun, but the question is a serious one...
Following the company's announcement after the close that it would buy competitor
Integrated Systems (INTS) for 20 million shares of WIND stock, one might wonder if the
share price cracks again because of fears over dilution. IMO if it does, it would create
what might be the last best opportunity to get WIND shares below $20 we'll see in awhile.
Of course, we'll know more tomorrow when the conference call takes place (8am
Pacific/11am Eastern..call in to 888-593-6346).
Even though the embedded industry is still relatively young when compared to its
potential over the next 2-10 years, WIND has already established itself as a world class
competitor; this will only be enhanced by this purchase. Despite a rough ride for its share
price over the last year, the company has forged ahead with the market's premiere
real-time embedded systems, single-handedly providing over half of the industry's
growth. There are alot of positive factors contributing to WIND's current and future
success and ones that bode well for shareholders:
--partnering with heavyweights like Intel (INTC) and Motorola (MOT)(and the MOT
connection becomes even more important with the General Instrument acquisition)
--a competitive advantage of its systems running on three dozen different
microprocessors
--strong demand for its product (both on a bundled and now unbundled basis) and steady
increases in market share
--a sharp chairman who picked an equally sharp new CEO, Tom St. Dennis, who came
from Applied Materials, where he grew his division to $1.5 billion in sales
--there has been substantial and sustained insider stock purchases, including St. Dennis,
who plunked down nearly $2.5 million to purchase almost 130,000 WIND shares just over
a month ago at an average price of about $18.75 a share. Insiders sell for alot of reasons
but there's only ONE reason they buy!
--on the operating front, the RouterWare acquisition is now likely accretive to earnings
--operationally, the company's appeal as a progressive, rewarding place to work seems
supported by an engineering turnover of only 10%, far below the industry's norms
Add all this to the fact that in addition to the growth prospects for traditional equipment
(Internet, telecommunications, networking devices, etc), we are just at the dawning of an
era that will see a multitude of our consumer products become "Internet aware" (as Chm.
Fiddler puts it). Thus, the market for WIND is young and wide open.
So what for the stock now? IMO the merger of the two top companies in the field should
light a fire under WIND's shares. With this acquisition, the company picks up more steam
rolling toward its goal of becoming a billion-dollar company. As the market learns more
about the embedded market and its potential, it could turn WIND into one of the coming
year's hottest stocks. And as for competition from Microbarf and Cisco, it remains to be
seen how they respond to the WIND/INTC combination. It seems WIND definitely has
first-mover advantage here and barriers to entry are high: millions of lines of code go into
these customizable products, so its not like falling off a log.
Of course, WIND does have perhaps one thing going against it: in the brave, new Internet
world, where bottom-line losses are expected to exceed top-line revenues, WIND is a
tech/Internet play that's MAKING MONEY! Real EPS!! Imagine that!
Ciao |
