Here is my latest thinking on WIND’s future revenues, and more importantly, earnings.
1. WIND reported 52 cents for FY 1996 (ending January, 1996) vs. 26 cents year-on-year. Actually, WIND made 59 cents according to my calculations, because it expended significant extraordinary costs associated with promoting Tornado.
2. In the current fiscal year, revenues should grow at least 32% to over $58 million. With those revenues they could almost double earnings, once again. With this revenue the upper estimate for earnings would be 99 cents, versus the street’s estimate of 67 to 72 cents. Don’t look for direct I2O impact in FY 1997, but there is an opportunity for a great deal of extra product sales stemming from the Intel endorsement, which has not been factored into the revenue estimates.
3. In FY 1998 the revenue should easily exceed $80 million. At that level WIND is capable of generating earnings of about $1.70, versus street estimates of 90 cents. By then I2O should begin to kick in, as well as one, or two, or three, or whatever, very big deals to push revenues up much higher, with extremely high marginal profits.
The cogent investor should begin now to think of WIND as a having earnings in the $1 to $1.50 range with a sustainable earnings growth rate of 40% to 50%. If you had utmost confidence in these figures, what is the intrinsic value of the stock? I would be interested in all of your answers, along with your justification.
After you answer this, we can discuss whether or not the stock should be bought on its current weakness.
Allen |
