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Technology Stocks : Wind River going up, up, up!
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To: Richard Karpel who wrote (3232)5/26/1998 3:26:00 PM
From: F. Foos  Read Replies (1) of 10309
 
Richard, Thanks for posting the conference call info.

I also listened to the call and would like to add my $0.02 worth.

1) Deferred Revenue:
The deferred revenue consists of pre-paid royalties and engineering services. These deferred revenues are reported as revenue on a percentage of completion basis.

Either Ron Abelmann and/or Dick Kraber said that the main reason for the decrease in deferred revenue was that their distributor in Japan had not made pre-payments this quarter. This doesn't indicate order cancellations or defaults.

Japanese corporations finish their fiscal year on 31 March. To close out their books for the year, a Japanese company would probably delay making pre-payments until the new year. I would guess that this the reason for the decrease in deferred revenues during the quarter.

2) Microsoft CE
Ron Abelmann and Jerry Fiddler discussed in detail their views on competition with Microsoft. They noted the significant differences between the embedded and PC markets.

The embedded market is relatively much smaller than the PC market ($1/2billion/yr vs. mulibillions/yr) and might not be significantly beneficial to Microsoft. Microsoft's competive practices are currently under the microscope, so a major move into the embedded market may be more trouble than it is worth.

PCs are homogeneous commodity products. One manufacturer's boxes are largely indistinguishable from the next. The embedded market is much more diverse. The embedded market requires a much more extensive level of technical support.

Jerry Fiddler said that they don't see Microsoft in 80 to 90% of Wind River's embedded business; the comunications eqpt., office automation, military and aerospace markets. Microsoft CE is found primarily in handheld PC/PDAs and settop boxes - latency and reboot tolerant devices.

Ron Abelmann mentioned that Wind River would be announcing new "dynamite" GUI products for VxWorks in several months. The GUI is based on the technology WIND acquired from NCI/Navio in Q4. With the addition of the GUI, WIND will be able to offer everything that CE has, plus Hard Real Time.

3) Lucent
RA mentioned that several years ago, WIND's business with AT&T Network Systems/Bell Labs (Lucent) was negligible. There were approximately 12 Lucent design wins in Q1. Lucent could become one of WIND's best customers in the not to distant future.

There is more in the conference call that is worth commenting upon, but I don't have my notes with me. I'll post additional info. if there is any interest.

Frank

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