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Technology Stocks : Wind River going up, up, up!
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To: Mark Brophy who wrote (1149)6/5/1997 9:15:00 PM
From: Michael Greene   of 10309
 
>>Wind River sells operating platforms to end users via Intel at a small profit so that they can make money selling tools to developers.

Mark, again I am going to need your help to understand how the license fees for Wind River's RTOS qualify as low margin. I assume that this is what you are saying.

Production costs would appear to consist of making a copy of the RTOS software and delivering it to the customer so that he may thereafter incorporate copies into each unit of his product. Gross margins thus appear to be approaching 100%. The operating margins should not be much lower since the software development costs for the VxWorks and IxWorks RTOS have already been absorbed. WIND follows a conservative policy of expensing rather than capitalizing almost all of its software development costs. I would expect some incidental administrative costs to track the revenues, etc. but it looks like we are talking about operating margins well up into the 90%'s. How do we get from here to "sells operating platforms ..... at a small profit"?
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