More notes from the Conference Call 3Q 1999
The Embedded Systems Conference, in San Jose this month, was the best yet for the company. Ron mentioned it in the opening comments as well as later on in the Q&A. Wind River is emerging as clearly the leading company. There were 10 partners showing in Wind's booth. 25 company's were showing Wind River software in their booths. There were 100 WindLink partners at the show. The lead count was 1800, up 50% from last year. Tornado II was demonstrated. There was a sense of rallying around Wind against Microsoft. MSFT spent a lot of money and had the biggest booth, but not a lot of activity in the booth. There was a bit of resentment against them for being so aggressive at the show, and they are not delivering. CE 3.0 beta end of next year.
Responding to a question about difficulty achieving numbers this quarter, Ron stressed that he feels comfortable about the growth in market share and exceeding objectives. The numbers are in the normal range. There was some slow down in the growth of Services Engineering due to slowing down in the semi industry. They haven't seen massive turndowns, but the companies aren't rushing into things. The orders are more spread out. That was made up for by run time royalties and maintenance revenues. Training revenue was about par.
Revenues by geographic area were: US 69%, Japan 14%, Europe 17%. They have been hedging the Yen.
Without getting more specific, Ron said that the percent of product revenue from run time royalties is 20 to 40%. But expect more impact on margins and profit.
The breakdown by industry is:
Communication and networking 25%, Office automation 22%, Industrial 15%, Military and Aerospace 25%.
Staff increases to 563 total including 34 in engineering and sales. 27% of staff are in customer support. There are 3 field engineers for every two sales representatives (up over the past few years)
Net income (up 38%) was up less than operating income (up 45%) due to higher tax expenses from moving investments into taxable bonds. Also, interest income was down due to lower interest rates. Income from investments was $290K.
I2O income: Ron reiterated "low to single digit millions" this year. Then, he said, Intel expects a significant ramp up. He wants to see a couple of solid ramp-up quarters before making any projections. Intel is getting more active in the I2O SIG, indicating that they are taking more control over their destiny (they see I2O as significant). Ron said he is "..feeling ebullient about the prospects..." and that we should see a solid I2O year next year. Also, "Wind River will clearly benefit from the NGIO strategy."
ZINC, NCI and GUI. Wind sees it as the trend of the industry and wants to be ahead of the curve. They see Zinc as a strategic investment which should play out next year. They had a successful tour introducing the graphics package and got encouraging feedback. The customers liked that Wind has a complete solution for graphics.
Wind River invested in a Exact, a telecom switch consulting company and software producer. The deal was similar to that with 3Soft. It is the type of vertical solution product line that Wind wants to build. |
