If the warning was really about Q2 and not Q1, why didn’t they know anything about Q2 beyond suggesting revenues might not show sequential growth? You might recall from the CC that they put off talking about Q2 or FY guidance, waiting until they had a chance to digest Q1 results and to do DD about futures.
If this was all about Q2, then I would suggest it would have waited until the earnings CC on May 17, if only because that’s what they did anyway.
I think the Gigabit Ethernet build-out and the synergy represented by WIND’s plethora of IP technology in the server appliance space adds up to a seriously huge opportunity that will be the catalyst propelling WIND to the next level. Many of these capabilities have been in the making for years, and have legs of their own, like I2O, iRAID, Infiniband, TMS, intelligent network processor support; TCP/IP-oriented up one side and down the other. Other technologies are relatively new to WIND, like Linux/BSD (needed to take advantage of plentiful management network management software, handy utilities, etc.), iNIC and iSCSI. To the extent that I2O and TMS, not just BSD Unix and VxWorks, underlie any framework of these technologies, in practical terms there simply isn’t any direct competition.
And, let’s be clear about BSD Unix. It is not aimed at replacing VxWorks; it is aimed at replacing generic operating systems in high-end devices like NAS devices or telecom boxes. The N+I announcement may be the first of a set of “rubber hits the road” announcements that should cast more light on the important role BSD Unix plays for WIND. Linux can’t be used because low-level interoperability tweaks are necessary between the generic operating system and WIND’s Intellectual Property, putting the latter at risk.
If I am even half-right, then it was critical to eliminate the Street’s concern that the downturn might be disastrous for WIND, before making exciting announcements at N+I. Recall that ABN Ambros put WIND on hold before the last earnings announcement on the basis that WIND cannot escape unscathed. The Street is concerned about the business atmosphere for WIND, and has priced that concern into the stock.
In any case, we should know much more tomorrow.
Allen
PS -- I refer to Linux/BSD because they are essentially the same thing. The heavy Linux lifting WIND already did prior to acquiring BSD Unix migrates over instantly. BSD Unix provides a vehicle for WIND benefiting from most Linux applications plus other Unix apps, including decades of development on BSD Unix itself. |
