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Technology Stocks : Wind River going up, up, up!
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To: Snowshoe who wrote (9577)5/6/2001 5:31:56 PM
From: Mark Brophy  Read Replies (1) of 10309
 
They sure have set the world on fire!

Anyone who bought Wind River when this thread started 70 months ago has received a fabulous 365% return! How could anyone be unhappy with that performance? Unfortunately, they’re a minority of the investors.

I suspect that most of the investors on this thread follow investment bank hype and owned this stock on July 23, 1997 when the convertible bonds were sold and the stock price was 23. The strike price was 32.33 (adjusted for 3:2 split) and the expiration was 3 years, so former CEO Ron Ablemann made a bet that paid off because the stock price on 7/24/00 was 31. As I noted in post 1810, he was very candid ("we were very opportunistic - the market is looking favorably upon our company") about his reasons for the offering. The losers were the bond buyers who refused to hedge when the price rose and the stubborn long term investors who refused to sell.

Wind River management deliberately deceived investors to raise money. They called their product an "operating system", compared it to the product that Microsoft sells, and promised investors returns similar to Microsoft. The crucial difference is the Microsoft product mediates system resources between multiple applications, but Wind River only provides subroutines that reduce engineering time of a single application. Even though Lotus despises Microsoft with great passion, they can’t design Windows out of the system. However, HP is free to design VxWorks out if they think the royalty payments are unreasonable on high volume products such as printers.

The smarter money bought this stock in the secondary offering in the summer of 1996 at 12. The price is now 25, they’ve doubled their investment, and received a 15% annual return over 5 years (about the same as the average NASDAQ stock). The smartest money saw the investor relations genius in Allen Benn and bought in Feb. 1996.
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