Thanks for your in-depth response to my questions.
I was surprised by your conclusion that the Asia crisis was the cause of Wind's slowdown last year, mainly because you are almost the first to suggest it. I reviewed some of the company's analyst reports from last year. Early last year we heard that revenue growth would be less than 40%, that the Q41999 would be more back-end loaded, that visibility had decreased, that DSO's had increased, that Ron Abelmann would resign (one year ago today!), that TMS would be delayed, that ISI was reemerging as a strong competitor, that WIND was incurring more risk by acquiring vertical markets (TMS). But, nowhere was there mention that Asia would have an impact on sales.
In fact Asian results were strong while North America was responsible for the back end loading. Dain Rauscher Wessels did mention that a slowdown in service revenue resulted from a slowdown in new operating system ports which was driven largely by Asian semiconductor manufacturers and that Asia revenues were flat for 4Q99. If Asia was the cause of the slowdown, why was it so difficult to trace? I guess what you are saying is that a two year delayed response to an external crisis may be intrinsic to WIND's business model (design wins, revenue two years later?). I rather think that the slowdown was a complex basket of internal and external events that put a cumulative cloud over the company for a year.
For me, as an investor, it is important to understand why the company's stock was so badly trashed last year. Was this the type of roller coaster performance that we should expect or is it an exception? The company is now much stronger since the acquisitions. Still, expectations of hyper-growth can lead to hyper-disappointment if targets are even narrowly missed. I think the stock price, if not the company's business will continue to be very volatile and risky for the next few years. Maybe this is the best reason to have a diversified portfolio.
I guess one can view these disasters as prime opportunities for long term investors to buy the dips. But, after last year's trauma and with a potential recession looming, I am reluctant to buy anything too boldly regardless of the story.
Again, thanks for your reply!----Peter |
