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Technology Stocks : Wind River going up, up, up!
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To: Erwin Sanders who wrote (9572)5/4/2001 5:58:09 PM
From: Mark Brophy  Read Replies (3) of 10309
 
Why are you frustrated?

The stock price 2 years ago was 15 and today it's 25. That's an incredible performance when you consider that we're in a bear market. Special credit should go to the investor relations people who have been able to keep the backward P/E at 50 (forward P/E is even higher!) even though earnings are contracting and massive layoffs have been announced.

What concerns me most about the recent announcement is the 10-15% layoffs. I always thought that Wind's biggest challenge would be hiring a sufficient number of trained employees. If the future looks as bright as it always did, they are going to need more people. So why this short-term measure?

There are a substantial number of people working on projects in the hugely overcapitalized telecom sector. In a normal cyclical downturn, they'd need these folks to return in 12-18 months, but the bubble was blown so full that they won't need them for 2-3 years. Layoffs are the prudent course.

On another worrisome note, Motley Fool has an article today on Wind. I learnt from that, for the first time, that HP has switched from VxWorks to Green Hills software for its ink jet printers, because of the high cost of royalties. I always thought that HP printers were one of the most visible and valuable products using Wind's software. Somehow this news never made it to this board.

SI isn't the lively place is was a few years ago. Yahoo is taking over. Like most dot-com businesses, SI is finding that they can easily give away their service, but it's much harder to earn a profit. The telecom business will not recover until that situation changes. My 2-3 year recovery estimate might be overoptimistic.
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