Most posters from the past week are spending their energy trashing the stock and it's prospects. The shorts may be having a party this week, but the party may be over soon. Wind River is developing a head of steam. And the stock is way undervalued.
From the conference call, the management seemed upbeat and confident. Why? They have 40% of the off-the-shelf market share, not including the 58% of the market that is still done in-house. The market is growing 25%(?). They have two (at least) new hot products. TMS (Tornado for Managed Switches) which addresses the telecom market and a complete INTERNET solution for building infrastructure. Yes, they did say the word INTERNET very clearly and many times. The XACT technology and engineers complete their Internet package. They called it "Cisco in a box". The complete solution is a more valuable package. They said that they are working to take the risk out of building commercial products by making WRS software complete, tested, and easy to use. Their customers aren't hackers, Ron said. The customers don't want to waste time with assembling a RTOS. They want to get on with developing their product. That is why WIND is being very careful and taking time to create a fully ported and hopefully flawless release of the Tornado II and their Internet infrastructure software. Wind River was always noted for its very high quality standards.
Paraphrased from the conference call:
...We are executing well, we have the right technology, a successful business model, a robust and complex market, we have staffed up professional services to meet the needs of vertical markets, have made good additions and still interested in more acquisitions, we have lots of design wins (embedded Java, ZINC), I2O is up 40% over last quarter, expecting 77 cents for the year, we are benefiting from Y2K, a new and substantial release of Tornado is coming out April 22, we now have "Cisco in a box": a complete INTERNET solution for routers, switches, modems, DSL and non PC devices, and we are "way undervalued".
Pretty convincing story. This may be a company that will build a large chunk of the Internet infrastructure of the next century.
Even if that is a gamble, with a PE of 18, this is ridiculously cheap here! |
