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Technology Stocks : Wind River going up, up, up!
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To: Mark Brophy who wrote (1222)6/7/1997 2:53:00 PM
From: Neil Kalton   of 10309
 
Mr. Brophy,
I'm just curious, what is your basis for believing that I20 sales will not exceed 7 million units a year? There exist a wide range of applications for the chip including the Wintel servers and potentially even PC's. I simply find it difficult to believe that Intel would be forwarding this initiative with such vigor if they didn't believe that they could realize substantial growth over the next few years. 50 million units in 5 years may seem optimistic but to think that unit sales will only be 7 million annually seems unduly pessimistic.

Also, it is my understanding that WIND's management does not want analysts to include I2O revenues into the earnings model yet for a couple of reasons: 1. The sale of the chips are out of WIND's hands and WIND is reliant upon Intel, 2. I2O is unproven. What if it doesn't fly? If analysts included I2O revenues into their projections and the chip failed this would leave both WIND and the analysts with egg on their faces. This could have very adverse effects upon WIND the stock. This would be unfair on WIND, especially since WIND, the company, does not need the I2O deal to still be a highly successful, high growth corporation. That being said, the non-inclusion of the I2O revenues has provided aggressive, risk tolerant investors with a chance to get in a company which could beat earnings estimates consistently for the next few quarters (provided that I2O is a success). Given the current set of facts, I feel comfortable with the risk/reward ratio.

-nk
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