Conference Call notes
Date: 12/01/1999
The company was founded in 1984. The legacy division of the company is the Imaging division. In 1993, the Imaging business was bringing in 9MM in annual revenue and had captured 90% of their market. The company knew it would have to expand into other areas to continue growing so they started looking into wireless.
In 1996, a couple of key things happened with Apple. Steve
Jobs came back in to run the company. One of the things he did was to get rid of Apple's printing division. This was good for IW as it meant that they had a whole new market for the Imaging division to go after, and Apple was instrumental in facilitating that as they did not want to appear to be abandoning their users. AAPL gave them the source code for free and asked IW to help ease the transition. Apple was also key to IW entering into agreements with all of the major printer manufacturers for that market (Canon, Brother, HP, etc.).
In the spring of 1998, IW brought their first wireless product to market - Infowave for Exchange. IW is licensing this software to wireless carriers who will in turn offer it to their customers. These carriers include BellSouth and Cantel (AT&T Canada). They are OEM'ing the software to Wireless Knowledge and that service is set to begin launching in 1Q00.
Glenayre is another alliance partner. Glenayre has 120MM pagers worldwide. The Symmetry product is intended to extend the Outlook environment to the pager platform. Users can download software to their desktop machines and then set it up to push specified data to their pagers.
There are upcoming announcements regarding new software products and new OEM deals with wireless service providers.
IW's goal is to get the right information to the right device at the right time.
Examples of other companies that are close to this space are Phone.Com (PHCM) and Aether (AETH). The IW guys have known the PHCM guys for 4 years. PHCM used to be Unwired Planet and now have a $5 billion market cap on 9MM revenue. They have embraced the WAP stuff and are licensing their micro-browser. MSFT is going to make their microbrowser available for free.
I asked him about the rumor that the Infowave logo had appeared yesterday on the Phone.Com website but was removed later. He did not deny that that it had occured but then indicated he could not discuss it any further. Sounds like something is imminent.
Microsoft Exchange is Microsoft's fastest selling product. It is rumored that MSFT will be announcing licensing numbers soon and that the number of seats of Exchange that have been sold is in the 40MM neighborhood, worldwide. You can start to build a revenue model by guessing at what percentage of Exchange users might want these capabilities and take it from there.
IW is OEM'ing Infowave for Exchange to Wireless Knowledge (WK). WK is a joint venture between Microsoft and Qualcomm that was formed to extend the functionality of Microsoft products wirelessly.
WK is signing up a bunch of different carriers. They will provide a single face to the user - so no matter where you are, you will have coverage from one of the carriers - but it will look like one carrier. WK will provide Infowave for Exchange to the carriers. This will be offered as part of a Premium Service. Infowave will have a share of the revenues on a per user/per month basis.
Infowave for the Net is the product that provides full wireless connectivity to a corporate intranet, including graphics.
IW is going after the wireless market in a big way. They have moved their sales and marketing team to Redmond, Washington. They are going after the 2700 ASP's (like mi8, an ASP in NYC that has licensed their software). They are selling directly to their carrier partners by emphasizing that this technology will encourage increased airtime usage and provide a richer set of customer offerings.
There was some pushback from corporations in 1998 to this technology, primarily due to Y2K considerations. With the end of this year, that will be behind us and the market is primed for this type of a product.
IW hired Dorsey & Whitney, a US law firm to file paperwork with the SEC. It is understood that this is in prepation for moving to the NASDAQ.
The company has near term goals of getting a strategic investment from someone in the space and getting an investment bank behind them. They are going for a top-tier firm and are keeping a dialog going with Piper Jaffrey, Merrill Lynch, Robertson Stephens, CSFB and to a lesser extent, Hambrecht & Quist. The company made one round of visits to the investment banks already, just to acquaint them with the company and let them know what their plans were. Now they will do another road show in 2/00 and this time, they will be "looking for something".
The company has plans to augment the management team in the near-term.
BOD includes Scott Land, the former Microsoft analyst. Also,
Morgan Sturdy was recently appointed as Chairman. He was appointed to the position in September after requesting same. He recently sold Hothaus, a company he had built, to Broadcom.
Vancouver is a hotbed for wireless technology companies.
Besides Infowave, there is also Sierra Wireless (who is making CDMA modem cards for QCOM) and elsewhere in Canada there is R in Motion and Wi-LAN.
Glenayre was up 34% today. DLJ came out with a BUY recommendation on the company. One of the largest shareholders of GEMS is a top guy at DLJ. This may bleed over favorably to IW at some point, but right now DLJ is not one of the brokerages they are cultivating.-
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