CNBC transcript, audio and video.
nasdaq-amex.com
CNBC - SQUAWK BOX
INTERVIEW WITH WIND RIVER SYSTEMS (WIND) CEO RON ABELMANN
FEBRUARY 26, 1999
SUMMARY: Abelmann says the company has 40% of the commercial market. Abelmann believes analysts' concerns are unwarranted.
Ron: Wind River Systems develops operating systems and development tools for embedded real-time software used by the aerospace, medical, and electronics industries. The company's products can be found in laser printers, jet fighter control systems, and even automatic brake systems. For its latest quarter, Wind River posted a profit of 20 cents per share. That's in line with estimates and 33% of year-ago numbers. It was the twentieth consecutive quarter the company met or exceeded expectations. Ahead of the report, shares fell off a fraction to close at 20 and change.
The 12 month range is 17 to 34. Joining us now to talk about his company's latest numbers: Ron Abelman, CEO at Wind River Systems. Good morning sir.
Mark: Mr. Abelman, good to see you. Thanks for being with us today.
Good morning, Ron, good to see you.
Ron: Stock prices closer to its low than its high. Can you explain that for us?
No, I really can't. I decided some time ago now to try and psyche out the stock markets. I think as you said we just exceeded the analysts' numbers in both revenues and profits. I think there was some concern approximately a month ago about our visibility going into the enter end of the year. I think the concerns were proved unwarranted and we'll see how things go ahead.
Ron: How about the look ahead? Are you comfortable that you'll be able to again match or exceed earnings expectations as you move into the first quarter and beyond?
I feel very bullish about it. I think we're going to be very. . .we're in a market stimulated by the growth of Internet appliances and the whole Internet phenomenon. This coming quarter we'll be rolling out more products and wind rivers will be rolled out, history of products that we have announced we'll start shipping. I think based on this new product base increased market share, which we estimate today at approximately 40% of the commercial market, I'm quite bullish and optimistic.
Ron: John Ryding.
Yes, Ron. I'd like to actually pick your brains about the year 2000 issues. Your company is embedded in the infamous chips and elevators and we hear about systems failing. I'm curious about what your reading is, how the term of the millennium will play out and maybe how it impacts your company.
We seem to be pretty immune to the year 2000 phenomena. Essentially we provide operating systems for microprocessors that go into applications like switches and routers, Internet appliances, automobiles, et cetera. So, in that context we don't have a very direct calendar attachment, which is really the year 2000 issue. It turns out the people who write application programs on our processors do have to be concerned about year 2000 depending on the application. So we're one step removed from that. We, obviously, have the admonitions we have on our web page we get to people writing code, for our operating system, but we are one step removed. And it should not have an impact at all on Wind River technology and on our applications.
Ron: Lou?
Lou: Well, with five years of straight great results, have you thought of going and doing a roadshow with a brokerage community to help make your stock a little bit better known and more visible?
Well, I do that three or four times a year, both in the U.S. Primarily the East Coast as well as in Europe. We have been somewhat undiscovered industry to date.
If you look at whole of the commercial market for real-time operating systems and software at this point it's still only in the 300 to $350 million rate, but I think market is expanding and as we expand as the whole explosion of the Internet appliance runs its course, I'm sure Wind River is going to be very much on people's minds.
Ron: Can you address that issue a little more specifically, because it seem S that maybe Wall Street overlooks a stock like yours, because it focuses more directly on what are considered sexier industries like electronic commerce and other aspects of the Internet. How are you going to participate in the growth of the Internet going forward?
Well, I think the major vehicle really takes place in two components. For the last five years we've be en focus very, very much on the whole Internet infrastructure, the switches, the routers, the hubs, cellular-based stations, satellite communications systems. And because we are in a bed of microprocessors we don't have the same visibility, but major suppliers to companies like Lucent, Nortel, Cisco, et cetera. So that's in the infrastructure that makes the whole Internet phenomenon work. Now, once you've got that done, you look at all forms of embedded devices from Internet appliances in the homes to in-car navigation systems in automobiles. All of these can be regarded as thin clients for the Internet.
We provide, essentially, the basic platform for the microprocessors that allow these thin clients to work so we're in the infrastructure. We're typically hidden. And this is why we don't get a lot of press, but I think as a major enabler to the electronics technology that allows people to be successful with their products in this whole new network generation of the Internet, I think in time people will recognize the fundamental merit that wind river brings to the market.
Ron: Mr. Abelman we appreciate your time.
Thanks for joining us this morning.
Thank you very much.
Ron: We've been speaking with Ron Abelmann, CEO at Wind River Systems. He joined us from San Francisco. |
