I doubt whether Mr. Kraber's head is going to roll over this one.
The characterization that his talk to analysts on Friday was a pre-earnings warning is probably an apt one. WIND has, and continues to manage the business with a sober realism that is preciously rare in the high-flying hi-tech world.
WIND has consistently beaten the consensus by 1 to 2 cents for 20 consecutive quarters. Under these circumstances, if and when WIND received indications that a quarter may not deliver to these expectations, they are faced with a binary choice - pre-announce, or don't pre-announce; in the face of extremely high expectations.
It would be unbelievably out of character, thus improbable IMO, that Mr. Kraber acted in a vacuum here. It was a tough call and time will tell if it was the right one.
I could think of a couple of reasons for the hickup. One obvious one; I2O. Now that the chips are down, there is widespread consensus that it is a technology that will not have a long 1/2-life. On the upside, I2O is providing WIND with material profit $$$s, just not nearly as much as many followers were anticipating. To WIND's credit, and within character, they have consistently provided very conservative, open guidance regarding the prospects of I2O since its inception.
Another event that coincides with this quarter is the extra attention and focus needed by managment for the move to the new location of their offices. Although the longterm benefits of the move are obvious, their is a real shortterm impact that is hard to quantify until the quarterly numbers start trickling in.
Other looming developments come via MSFT, INTS, and LINUX among others. It stands to reason that WIND should expect more choppy waters ahead given the announcements and history of the last two years that INTS may finally be digging itself out and that MSFT may soon unveil something more credible than realtime CE, or INTS-in-a-MSFT-NT-box.
The real question for the longterm investor is, "does MSFT present a realistic threat to WIND's future?" The big question is hard to answer. Until MSFT makes up for the credibility gap it suffers from in this industry, in the meantime WIND will enjoy crucial time in fortifying its hills.
I have been in the embedded systems industry for over 11 years. I'm intimate with COTS RTOS's and have had the pleasure of writing my own. I am not in a position to discuss the technical merits of each competitor in this forum, but feel the need to mention this in order to lend a degree of support to why I have put my $$$ behind WIND shortly after their IPO.
There is no doubt that MSFT will again rattle their saber, or that some WIND customer may choose a competitor for various reasons from time to time. This type of news will certainly rattle the stock price. But, WIND has a critical head start with superior products wrapped in a winning business model in an growing industry segment with a high entry cost.
I keep my ear to the ground, but it gives me real peace of mind that WIND continues to successfully demonstrate that they are forging ahead with their growth strategy and so far see nothing in the most recent events that cause me to divest and sit on the sidelines.
Cheers,
Ronald Paul |
