I'm sorry, but I really don't understand why we continue to waste our
mental energy on Mark. This is the guy that was arguing that we were
all fools if we didn't sell WIND at 19 1/2, because the only direction
it was going was down. This man clearly does not have a clue, and I,
for one, am no longer going to pay him any lip service.
I think Allen pointed out in his post why his numbers were out of
whack; I ran the numbers myself, and discussed it with him via email,
since I was unable to reproduce his results based on the original
post. He got back back to me with the corrected growth rates that he
posted today, and I was able to come within a couple dollars of his
results. Allen has a Ph.D. in Mathematics, and over 30 years of pro-
fessional experience, not to mention a considerable amount of success.
Defending him against the likes of Mark is laughable.
I listened to the conference call and heard nothing you could consider
remotely negative. Net income rose 101% yr-to-yr - hard to beat that,
especially taken in the context of a continuing, unbroken string of
such performances. WIND intimated once more that a close look at the
balance sheets of their competitors would show that WIND is taking
market share. They have $100M in US securities (3-5 year maturity).
They also indicated that they have 34 I2O customers, and they are very
optimistic about this segment of their business. Ron quoted Intel's
projection of over 1M i960RP/RD sales, mainly toward year's end. This
would translate into roughly $0.07/share, this year. This is royalty
income only; it does not include any Tornado for I2O development tool
revenue. Intel is project 8M - 10M units for 1998 - even Mark can do
the math. As stated over and over again, none of this revenue has been
included in current earnings projections. But even ignoring I2O, WIND
is clearly on the way to repeating their past pattern of beating the
analysts' projections by 15% - 20% each and every quarter. They also
continue to improve their profit margins, year-to-year.
Having watched WIND for nearly 3 years now, I was not overly surprised
by today's price action. We are back in a bullish mood, where the
stock is being bought up by smaller investors prior to the report. You
will notice that volume during the last upward move was rather light,
until today. With expectations being so high, its hard for there NOT
to be a let-down. The stock was down before the conference call was
even completed. From what I've seen in the past, the big boys won't
even react to this earnings report until next week sometime, at the
earliest. This is not the only stock they are watching, and they will
go over the report in detail before acting. These guys are more than
happy to watch the small investors take their profits. In addition,
the earnings per share will not be updated on most financial services
until next week, so in the meantime the PE looks higher that it really
is. Although trailing PE on a growth stock like WIND is meaningless
to me, there are many small investors who live by it (like Mark). As
a point of reference, General Nutrition (GNIC) was recently showing
a trailing PE of 120; they had reported earnings, but it hadn't made
it into the financial reports yet. Still, GNIC was a featured buy in
the recent SI weekly stock picks. Sorry, I'll stick with WIND. BTW,
we are showing a trailing PE below 70 at the current price and latest
earnings. This compares to trailing PEs in the 90s last year. These
multiples are not at all high, given WINDs continual, consistent, and
exceptional rate of growth which, if anything, will improve (in terms
of net earnings) over the next several years.
This is the market breakdown I heard in the conference call:
20-25% Communications;
25% military/aerospace;
20+% office automation/PC;
5-10% consumer; and
the balance in industrial controls/robotics/automotive, etc.
-Dave Lehenky |
