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

To: Andre Daedone who wrote (7381)	3/3/2000 1:54:00 PM
From: paul feldman	Respond to of 10309

I'm satisfied with St. Dennis presentation. I'll buy more!

To: Andre Daedone who wrote (7381)	3/3/2000 5:32:00 PM
From: Don Lloyd	Read Replies (1) \| Respond to of 10309

Andre - [...He also stated that they were 1.5 cents shy on earnings because of the unexpected share price double which caused them to have more shares, something to do with the SEC...] Let me make an approximate attempt to explain this, as it is the primary factor in the erroneous perception that WIND had a less than stellar quarter. When a company issues employee stock option grants, each grant is for a given number of shares at a given exercise price. These are granted over time to different employees at different prices. When the calculation is made to determine the number of diluted shares for EPS reporting, some, but not all, of the outstanding option grants are counted as if they were actually shares that had been issued from the treasury and exercised. While I don't know what the exact rule is for determining whether a given option grant is counted, it probably is something like the following: Count a given option grant if and only if the exercise price for that grant is lower than the average price of the stock for the quarter. This rule would only count option grants that would be worth exercising at the average price. Other factors undoubtedly come into play as well. Since the average stock price in the last quarter was significantly higher than in the previous quarter, more option grants had exercise prices below the average stock price and thus were counted, helping increase the share count by 7.8% quarter over quarter. To help understand how extraordinary this is, consider the following: If this 7.8% increase in share count happened every quarter, then an dollar earnings growth rate of 35% per annum would result in completely flat EPS growth, i.e. no growth at all. Regards, Don

To: Andre Daedone who wrote (7381)	3/3/2000 11:23:00 PM
From: Carpe per Diem	Read Replies (2) \| Respond to of 10309

Hi Andre, I laughed when I saw CNBC answered your question, I guess the little guy can be heard after all! Unfortunately, St. Denis didn't exactly foreshadow stunning growth when he answered $1B in 4 years, or 35% a year. That's not bad in itself, however it will come at the expense of EPS growth. Fiddler implied as much by giving St. Dennis a free reign to grow the top line. These are my projections going forward. FY1999 EPS = .61 WIND will definitely grow EPS at a significantly slower rate than in prior years. I am using 20% EPS growth in my calculations. Hence, in 4 years EPS = 1.26 The wildcard is the price to earnings ratio investors will assign to WIND. I'm using a PE of 75, down from the current PE of 107. That gives me a stock price of $94.50 in 4 years time. Still not a bad return, however who really knows how investors will value a company growing revenues at 35% and EPS at 20%, maybe it will be less, maybe it will be more.... Those yahoos at Yahoo who think WIND will be $150 by the end of the year should give their head a shake, they are counting on a PE of 250. A tad wild given 35% revenue growth don't you think. Wind's problem is that they actually make a profit. If their EPS was negative, their PE ratio would be non-existent ala Amazon, Yahoo et al. Then the stock price would be left to investors imagination. In that scenario, the hype surrounding the embedded market would probably have made WIND a $10B market cap company by now. I hope I am proven wrong by those who are willing to pay $250 for $1 in earnings, I really do, I'll be smiling and shaking my head all the way to the bank. Rinks