I went to the annual meeting as well, and only want to add a few comments. The presentation we saw was what they showed on their road show to analysts and potential investors. I was impressed with the way that they have reorganized the company into three main parts: Networking backbone, Transportation-Defense-Industrial, and Consumer. All of these are driven by Moore's Law and the trend toward complexity, meaning WRS is moving towards selling services instead of just components. They are working with smaller companies (not named) to achieve this, some of which are getting seed money from WRS Ventures. Right now their revenues are 60%-70% products and 30%-40% services. St. Dennis said they are moving more into the services side where better profit margins are. Networking backbone is really getting a boost right now from the new Intel and Motorola chipsets. They expect Automotive to be a big area of growth, and the Consumer side has got their first product out (Java-based Tornado for Internet Appliances) in only 6 months. I think they are doing a great job of reorganizing/merging, and are poised to really dominate their markets in US, Asia and Japan. They have 'Achieved Critical Mass' as one slide said, meaning that they are 10 times larger than any competitor, their $75 million R & D budget vs $30 Total Revenues for all competitors combined. I agree with Kevin Landis; WRS is going to be a winner in 2001 and beyond, they have put all the right pieces together in several key markets. They did say that they would be working with more analysts and I don't feel they need a PR machine, all they need to do is execute their plan and the stock price will follow. They are a much bigger, more robust company than they were a year ago, and I'm looking to add to my position here. They also mentioned that the construction of two more building that is going on in Alameda will allow them to get out of leased spaces, the cost of their new space is approx $1 - $1.25/sq.ft., vs. current market price of $2 - $2.25/sq.ft. Not a huge point, but it shows that they are paying attention to costs, as well as growing new product lines. They were questioned about adding Linux products and they said that they are currently talking to several companies to see if their is a need for their products in that area, and would move into that space if demand was there. Lastly, I got a nice brushed aluminum coffee mug and a WRS polo shirt, probably leftovers from their dog/pony show.
More than you needed to know,
CMM |
