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Technology Stocks : Wind River going up, up, up!
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To: ratan lal who wrote (10058)5/10/2002 9:10:04 AM
From: JSwanson   of 10309
 
I don't dispute anything you stated in your most recent post. If you look at the quarterly history of WIND, you can trace the lack of financial performance to the time of the Integrated Systems merger. Once WIND merged with ISI its cost structure increased materially. The last time WIND had an operating profit was the quarter before it closed the ISI merger (Jan-00). Some of this is certainly due to the tanking of the tech economy. If tech spending had continued on the pace of 1998-99 then much of the cost problems would have been masked (that is until a downturn occurred).

Things certainly look awful right now but the reason for the $22 million restructuring charge last year was to reduce the company's cost structure (reduce workforce and rationalize facilities). The effects of that effort should, hopefully, begin to show up this year and into 2003 assuming tech spending does not contract significantly from here.

End the end you are right. Companies should keep a diligent eye on expenses as much during upturns as they do in downturns. However, its difficult to do that when the company is in the middle of a strategy of growing to a $1 billion in revenue company from $400 million (now $300 million). In order to meet demand for $1 billion in revenues, you need to have the infrastructure to support it and when the market turns against you as rapidly as this last downturn did you end up having to play catch-up on the cost side.

Regards,

JS
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