Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Carpe per Diem who wrote (6983)	12/14/1999 9:07:00 PM
From: Richard Karpel	Respond to of 10309

From Barrons Online. Timothy Keefe, lead portfolio manager of John Hancock Large Cap Value Fund: Q: One more pick, please. A: WindRiver Systems (WIND). Q: And what do they do? A: They are the provider of operating systems to non-Intel chips. We bought the stock at much lower levels. Q: It's been straight up the last month or so. A: We continue to love it. We think they dominate [their] space. Q: So, what does WindRiver bring to the table? A: WindRiver sells operating systems. Maytag does not want to invent an operating system for the chip that you need to write software [for their washing machines]. So, it takes advantage of companies outsourcing the operating system. Q: What do you like about WindRiver's business model? A: There are three revenue and earnings streams. Number one, they get a license for every engineer that is sitting around playing with VX Works, [an operating system]. Q: What else do they get revenue from? A: They get paid for service, similar to Microsoft. That's a high recurring revenue stream. And the third thing is a royalty stream. They actually get paid for every system that is installed that was written on VX Works. Q: The stock's more than doubled since late October. How much more upside is there? A: Even at 42, we still see over the next five years that this stock can increase threefold. Why? Because we think very simply that the revenues could be $1 billion in the next five to seven years. And the business model makes us very comfortable that they can do it, at least [with] a 20% net margin. We think that net margin -- $200 million in the next five or seven years -- will be capitalized [at] at least 20 times earnings, which is not heroic. That gets a $4-billion market cap. The current market cap is $1.7 billion.