I am astonished that no one on either this or the Yahoo thread has commented on some salient points made in the CC. The obsession with gloom and doom must be eating away at brain cells. Forget the economy and concentrate on the company.
The main point Kahn reiterated during the quarter was that WIND’s revenues would suffer because the company did most of its business in communications, and communications/network equipment companies (WIND’s customers) were getting killed. Ostensibly, Kahn was proved right in the CC. WIND’s customers are being timid as they navigate through the slowdown.
But wait. How come TMS design wins, the very heart of the communications/networking sector, increased from 17 to 27 in the quarter? Not only was this an enormous sequential pick up in TMS business activity, but the number of new sales in one quarter is spectacularly large for this type of product. I remember when Intel boasted of 34 cumulative design wins for the IXP 1200 after about 9 months. Not long ago that number was raised to 100, but only after one and one-half years. WIND did 27 in one quarter for TMS.This gain was huge, and speaks volumes for the importance of TMS and heralds a key role for WIND in managed switches throughout the communications and networking sectors.
The point is that even though WIND’s customers are taking extreme hits, and nowhere more than in communications/networking, WIND’s solution products are needed in these sectors more than ever. This had to contribute to WIND’s stellar performance in what turned out to be a most trying quarter.
How come no one commented on the detailed metrics WIND gave for bookings during the quarter? Management said bookings by end-markets were: Comm. 48%, Mil/Aero 15%, Auto/Industrial Controls 14%, Digital Consumer 10%, Storage 5%, Others 8%.
Does anything about these numbers stand out?
Answer: Yes, Storage 5%
That’s right. All the categories are traditional except for “Storage”. WIND has never categorized anything that way before. It means that the storage business now is so significant and fast growing that it deserves its own classification. It suggests that I2O has continued growing rapidly, from what was about $2 million in Intel royalties in 1999, and not much else (ignoring the revenuing of earlier minimum guarantees with DEC and Symbios Logic, acquired by LSI), to a total run rate today of over $20 million. By “total run rate” I mean all storage-related revenues, not just royalties. It probably is unrealistic to expect that I2O royalties have jumped five fold in a year and a half on the basis mainly of iRAID alone.
Storage is an outgrowth of I2O, and is the main sector using IOPs, consisting of such products as iRAID, and storage devices growing out of iRAID. TINA is likely to be the real killer app in this space, driven by GbE, and should propel an already sizeable and rapidly growing lily pond forward and upward. While facilitating enterprise storage will remain a major thrust of TINA, and certainly iRAID and iSCSI, iNICs and iNPs extend the space to other network capabilities supporting server computing, which we call Server Appliances. This lily pond looks like it is well underway and deserves close scrutiny by the thread, and now can be directly monitored by metrics reported by the company.
Tornado for Home Gateways was the third named Tornado product emphasized in the CC. Like TINA, THG builds off of WIND’s existing dominance in cable and DSL modems, as well as networking protocols. Since both cable and DSL have been experiencing rapid growth, despite the failure of the 1996 Telecommunications Deregulation Act to grease the DSL skids, Tornado for Home Gateways business for WIND should be sizeable already and rapidly growing.
Neither WIND nor we can do anything about the economy or the stock market, but that doesn’t mean we quit thinking.
Allen |
