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

To: James Connolly who wrote (6845)	11/21/1999 2:50:00 PM
From: lkj	Read Replies (1) \| Respond to of 10309

James, Let me add a bit more to your I2O number for those who haven't been following it as closely. In WRS' Q1, I2O royalty recognition was only Intel's I2O royalty in Q4 of 1998. Starting WRS' Q2, because Intel was able to report its quarterly I2O royalty a month before WRS closes its book, WRS no longer recognize the royalty with the delay of a quarter. So in WRS' Q2, it recognized I2O royalty for both Intel's Q1 and Q2. I2O royalty from Intel using Intel's fiscal quarters: Q1:$363K Q2:$408K (+12.4% sequential) Q3:$537K (+31.6% sequential) Q4:????? Filder has said that the I2O royalty for this year will be $5 million dollars. We know that LSI has been paying $745K per quarter to WRS since Q2. This means that I2O will generate 1457K royalty for Q4. 5,000-(7453)-363-408-537=1457K But since in WRS' Q1 also included Intel's Q4-98 I2O royalty, the Q4-99 I2O royalty from Intel will be a bit less than $1.46 million, probably some where around $1.2 million. (This astonishing growth will certainly be classified as "inside the tornado".) We have waited so long for this I2O surge. Assuming that I2O revenue will grow 300% next year. We should see I2O revenue going to $20 million. The net margin on this product is probably between 80% to 90%. Throw in a 35% tax rate. 20.8*.65=10.4 million profit. Base on the hyper growth of I2O, this part of the business alone deserves a 100PE. And the poor WIND has only a 1.34 billion market value right now. Therefore, despite this big run up, the stock is grossly undervalued. I also have a question. Is Intel not using StrongARM for I2O right now? Khan