Thanks for reporting on insider sales. Since its IPO, I have noticed that some executives routinely sell some or all of their stock options, which has never correlated to any particular business result for the company. The co-founders have regularly sold off small chunks to make up for taking modest salaries. But more important, venture capitalists still own considerable stock from when they invested early prior to the IPO in April 1993. As of May 31, 1996, they owned about 25% of outstanding common stock, or about 3.5 million shares. Expect the venture capital stock to slip out in big pieces as they need to get their money working in other new ventures. This does not reflect negatively on the company, since venture capitalists are not long-term investors.
You should be able to differentiate what class of insider is selling, or buying, which is relevant to any interpretation of insider activity; if not, let me know and I will help you. Also, as of May 1996, I think the float was about 5 million shares. I Noticed that the IBD reported a float of 6.7 million shares in Tuesday’s paper. Just after the split, the paper reported a 4 million share float. Either the paper they made a mistake Tuesday or the venture capitalists are exiting.
HOT NEWS: WIND announces secondary offering of 2,475,000 shares, of which 1,650,000 to be offered by selling stockholders. Probably this is providing an exit for venture capitalists, but we will know for sure when the prospectus is available. The remaining 1,650,000 shares to be offered by the company is for general corporate use.
Per your post #125 remark about the importance of maintaining/building market share, I agree totally. Hence, the secondary should be viewed with enthusiasm by the long-term investor. At the time of the I2O announcement, I decided that WIND’s near-term quarterly profitability all at once was irrelevant. WIND will achieve great heights if and only if it firmly establishes and maintains market leadership. If every ounce of profits has to be expended (re-invested) to make that happen, then so be it. The result will pay off handsomely. Even though my statistical projections show terrific near- and mid-term profits should obtain if expenses continue as statistically projected, a management decision to re-invest those profits (as additional expenses) would be justified in my opinion. This is why I feel it is important for investors to appreciate the possibilities in dollar terms and therefore the importance of rigorously pursuing the possibilities, and stop focusing on the next quarter’s per share earnings. Fortunately, I believe WIND will be able to produce excellent quarters figures as it pursues it continues to strengthen its presence in the market.
As you have noticed, FY97 earnings estimates have been climbing. But so have FY98 estimates. H&Q initially was expecting about $.92 pre-split for FY98, and which may not have been reported to Zacks and the like, but has recently raised it to a $1, which is $.67 post-split. I believe Wessels, Arnold & Henderson first introduced FY98 estimates at this level. Also, notice that this Spring Wessels increased its estimated Sustainable Growth Rate for WIND’s earnings from 35% to 45%.
Your post #81 showing imputed RTOS unit prices was helpful. Any more you can find out about license fees would be useful. Actually, I assumed a lower figure, by far, than those you calculated. Hope you are right. What we need are three sets of figures updated regularly:
1. Number of 32-bit embedded microprocessors shipped (or deployed), hopefully by category of application: military, tele/data communications, I2O, office equipment, automobiles, home appliances, digital TV and hand-held devices. This cut may or may not be available, depending on the source for deriving the counts.
2. Market share between INTS, WIND, MWAR, Other Commercial and Roll-your-own.
3. Unit run-time license fee by vendor and category.
Any help you, or anybody else, can provide will be appreciated.
Allen, |
