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Technology Stocks : Wind River going up, up, up!
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To: Allen Benn who wrote (7993)6/22/2000 11:15:00 AM
From: Erwin Sanders  Read Replies (3) of 10309
 
Allen:

Thanks for the excellent summary of the Analyst Day meeting. You are doing all of us a great service with your reports and views. I am sure that your post will be used as a reference on many future occasions, as many of your posts are.

I would appreciate your answers on a few questions:

1. Among the analysts attending, were there any new ones from major investment houses (apart from CSFB, Prudential and Lehman)? Was the "Linux threat" the only major concern among them?

2. I have some concerns about your projection of the DSL lily pond:

a. Is it reasonable to assume a 230% growth rate for 4 years (to 23 million from 200 K units)? This means that there will be one DSL per ever ten heads in the U..S. or 1 per 20 if 50% of the DSL sales were outside the U.S. This sounds rather excessive.
b. If Wind currently owns 90% of the market, is it not likely that competition will start to heat up and erode Wind's share? 90% seems almost impossible to maintain even if Wind is the gorilla.
c. Assuming the growth projections are correct and that Wind is able to maintain its market share, the 2003 revenue for Wind will be
200,000 x .9 x (3.3^4 less 3.3^3) x avge unit revenue
=14.9 million x avge unit revenue

To reach your $70 million would require the average unit revenue to be $4.7 - rather high don't you think, given that many will be $1 revenue units?

3. Was there no reference to I2O at the meeting? I am rather concerned about this. You have always been highly optimistic about I2O in the past ("I2O can alone justify Wind's current price", and during one of last year's early conference calls, Jerry F (or was it Ron A?) mentioned that I2O was finally beginning to ramp up and that this was one of the instances where the ramp-up was later than anticipated but the potential volume had meanwhile increased significantly. Now in the latest conference call, I2O was mentioned as being insignificant. What has changed?

Regards

Erwin
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