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Technology Stocks : Wind River going up, up, up! -- Ignore unavailable to you. Want to Upgrade?

To: Andre Daedone who wrote (6152)	8/22/1999 7:44:00 PM
From: Erwin Sanders	Read Replies (3) \| Respond to of 10309

Wind's conf calls have always been interesting and upbeat, and has probably helped in providing short term boosts to the stock price. But how long can this go on? We have now come to expect a very upbeat CC from Wind each time, just as we had come to expect that Wind will beat consensus estimates by 1 or 2 cents. When the earnings started to fall below consensus, the stock price tanked. what wil happen if a future CC is not as upbeat as it usually is? On the subject of earnings, didn't Abelmann indicate at the end of the 1st Q that although Q1's earnings were lower than anticipated, he expected Wind to make the FY2000 consensus forecast? It appears that the FY2000 forecast has now been lowered. Let us also note that Q2 included 2 quarters of I2O revenues (is this 2 quarters of Intel i960 revenues plus 1 quarter of ARM revenue of 2 quarters of both Intel i960 and ARM - anyone?). Wind must be viewed as a riskier investment than a year or two ago. It is in transition and who knows how successful they will be with new products, new business model, and new management structure (including CEO). This is what is likely to keep the stock price at current levels in the foreseeable future. If Fiddler's view of $1B revenues in 4-5 years pans out, this will turn out to be an exceptional investment. However, I have some misgivings about this. Firstly, Wind is increasing its role as a software consultancy. There are limits to margins on software consultancy. Secondly, where are they going to find enough RT talent to grow at such levels, unless they acquire INTS and MWAR and a few others. I am increasingly inclined to think that Wind will be acquired in the near future. Fiddler is a great visionary and visionaries do not make good CEOs usually - and the past has proved it. Abelman made a tremendous impact to Wind's bottom line when he came on board. If there are more production snags and management faux pas, or the markets are not reacting positively to Wind's prodcts, Wind might be tempted to throw in the towel. Lot of companies would be interested - INTC, SUNW, TI, CSCO. Interesting question: which one would want Wind the most (and therefore expect to pay the highest price?) Erwin