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

To: docsox who wrote (7458)	3/14/2000 9:08:00 AM
From: Carpe per Diem	Read Replies (2) \| Respond to of 10309

"To give short term priority to the stock price rather than the long term success of the business would be myopic, even if it made some shareholders happy." Then by extension, all of corporate America must be wearing coke bottle lenses. Corporations live quarter to quarter, those that operate in a vacuum of investor and analyst expectations will get hammered. I've been there and lived it. Rinks

To: docsox who wrote (7458)	3/14/2000 10:01:00 AM
From: Knight	Respond to of 10309

WIND's Acquisition Strategy, WIND as an emerging "Gorilla", etc. I'm in WIND for the long-term (I have a three year old and a one year old and I consider it part of their college fund) and I think WIND is acting brilliantly in acquiring what it needs. For WIND what's important is top-line revenue growth and market share. The stategy of growth by acquisition is not just a .com strategy. It's a strategy that's necessary in order to win. In general, tech companies who try to build everything themselves are destined to failure in today's marketplace. (Unless, they're already a "gorilla" like Microsoft.) With the explosion of pervasive devices connected to the internet, time-to-market concerns along with the shortage of tech talent will drive more and more vendors to commercial off-the-shelf embedded OS's. The embedded OS's that win will need to have: 1. Market leadership The majority of customers in tech markets are pragmatists who don't like to jump on board a technology until a clear winner emerges. The most important measurement of market leadership is market share. WIND took a decisive lead here by their acquisition of INTS. Brilliant move. 2. Great tool sets so that products can be developed and enhanced rapidly. WIND is trying to ensure that they have the lead in both of these areas by their acquisitions. Management's willingness to use their stock as currency and possibly negatively impact short term earnings is, in my view, a sign of confidence. WIND still has a ways to go before the game is over, but, in my view, they appear to be making the right moves to make their shareholders prosperous (unless, of course you're a short-term) momentum player. Side note: Any time a company makes a major acquisition there are those who opine that the acquisition will hurt financial results due to the costs/distractions of merging two product lines, etc. If the merger is truly ill-conceived due to poor product synergy, etc. this complaint can be valid, but I don't think this is true in the case of WIND's recent acquisitions. I heard this same sort of argument in the CRM space a few years ago when Seibel purchased Scopus. At that time, I was invested in Vantive (a competitor) and some argued that the Seibel/Scopus merger would create major disruptions and give the advantage to Vantive. Unfortunately, I bought those arguments and stayed 100% invested in Vantive. The Seibel/Scopus merger turned out to be a very important event: by combining the strength and market share of both companies, it established Seibel as the leader and added to their already growing momentum. Vantive got crushed and I learned some very important lessons about investing. Another similar example is Veritas' acquisition of Seagate's storage software division last year. At the time, as I recall, this was the largest pure software acquisition in Silicon Valley history. This also appears to have been a great move. (It gave huge jump in market share and established them as a clear leader.) A look at the charts of Veritas and Legato (their nearest pure play competitor) illustrates what happened next. Late last year, I purchased and read "The Gorilla Game." To my surprise, that book used the CRM market (Seibel, Vantive, Scopus) as a case study in order to illustrate principles for investing in Tech markets. The book reinforced some of the things I'd already learned about tech investing (some, the hard way) and gave me many additional insights. (Too bad I didn't know these things a few years ago or I'd be much wealthier.) If you any of you have not yet read the "Gorilla Game" you should. I now consider this to be the bible for the individual tech stock investor. I tell my friends: "You should not invest in tech stocks without reading this book." BTW: I do not yet consider WIND to be a "gorilla" by "Gorilla Game" standards (the term has a very specific meaning); however, I think they're making the right moves to become one.