This will have to be short - I’m leaving the country until early June and have a plane to catch.
Note that somebody(s) is buying all three of WIND, MWAR and INTS over the last month or so. Either each of these companies has good news ready to poke out, or else some institutional buyer(s) is beginning to understand the story and is quietly loading up. I suspect the latter.
Remember, the story is not out on these companies. At the H&Q conference no speaker mentioned Embedded Systems.
As far as WIND goes, it is cheap at any price under $100. Why? At least one reason is I2O; there may be many others the impact of which I am unaware. I asked Intel about I2O at the conference, and I just received their answer today. The i960RP will start to appear on motherboards in early 1997. Intel expects it to begin to appear in OEM hardware in 2nd half 1996. I already knew Intel will be starting an advertizing campaign shortly, and that there will be a special I2O conference at the June Comdex. Guess at the run-time license fee per i960RP and load up on the stock!
This emphasizes the importance of knowing more details about run-time license fees. WIND need not, and probably should not, tell us what each i960RP is worth; although they did tell us it is a flat, fixed amount paid by Intel with each such chip shipped. But as investors we do need to know all three of these companies run-time licenses fees on an aggregate basis, and perhaps by categories, e.g. large vs. small deals; time since design win (like same store vs. new stores in retail sales reporting); by geography; and most important, by application area: telecomm and datacom, office automation, consumer products, automobiles, military, etc.
Why do investors need to know about run-time license fees? Because all three of these companies represent to investors that a major importance of selling Embedded Systems development tools and services, as well as the importance of porting to numerous processors, is to win designs that ultimately pay off in run-time license fees. Thus, the single most important reason for buying these companies is the expected future royalty stream, not product or services revenues. To correctly value these companies, investors need detail information about how well that vital stream of revenues is progressing.
If this information were provided regularly by all of these companies, their market value would better reflect future expectations, and this is how it should be. My motives for pushing an "open license fees" reporting is not to hype the stocks, but to provide proper information to investors, enabling the market to value these companies more efficiently.
Keep the stock together while I am gone.
Allen |
