Thread:
I fumbled across this article on WIND, fwiw:
cbs.marketwatch.com
Wind River Systems Inc. is making
your appliances smarter, but you might never know it.
The embedded software developer (WIND: news, msgs) doesn't sell to
consumers, but its products are put into everything from NASA planetary
rovers to DVD players to Internet photo frames.
Wind River is banking on the public's awakening desire for so-called
smart gadgets to propel its financial growth and reputation on Wall Street.
Clients use Wind River's operating systems and software as the building
blocks for their own products. (Value Chains?)
"What we really do is provide platforms that people can build products on
top of," said CEO and President Tom St. Dennis.
Indeed, Chandra Venkatraman, president of Arula Systems, a spinoff
from Hewlett-Packard (HWP: news, msgs), said that's exactly what his
company uses Wind River's operating system for.
"The operating system provides us with a Lego set, and we take the
Legos we really want to use. On top of the fundamental thing we are
getting, including a cheat sheet, we have designed our own Lego pieces
and the end user is seeing the completed product," Venkatraman said.
Wind River can boast of a 30 percent
market share in embedded technology,
more than twice its next closest
competitor, and that market is only
going to grow as progress is made in
the arenas of bandwidth, connectivity
and processing speeds.
"It's going to be interesting to see what
growth will be like in this area," said
Jennifer Smith, managing director with
Dain Rauscher Wessels. She said the
demand for faster, more complicated
microprocessors has only one place to
go from here -- that's up.
"I personally believe the industry is at an inflection point," (Crossing the Chasm?) said Curt
Schacker, Wind River's vice president of marketing and corporate
development.
He added, "Everyone wants to connect everything, and the Internet is the
key to that. What that says to us is that we need to move real fast and
make sure we can supply customers with products that allow them to
build what they want to build."
Making that happen for customers, including Cisco Systems (CSCO:
news, msgs), General Motors (GM: news, msgs) and Dolby Laboratories,
has translated into a slew of acquisitions in the past year.
Wind River bought five companies during the past year, including a $930
million purchase of competitor Integrated Systems Inc. that instantly
doubled Wind River's size.
Wind River now has more than 1,500 employees and 15 research and
development operations worldwide.
"You have to have a lot of technology, and there are only two ways to get
it: build it or go out and acquire it," said Schacker. "The Internet is
exploding, and we felt time was of the essence."
Investors might be
saying the same thing.
Until March, the
company's share price
climbed steadily to an
all-time high of 66.
Then Wind River,
working to absorb its
recent acquisition,
reported earnings
resulting in a
19-cent-per-share profit that missed analyst estimates by two cents.
This knocked the share price immediately down 15 percent, and then the
entire stock market turned bearish, ultimately chopping the share price
down to levels below 30. Shares of Wind River closed Friday up 2
percent to 40.
Wind River's revenue has steadily climbed from
$44 million in 1996 to $171.1 million for 2000.
Earnings have bounced around, but following
digestion of recent acquisitions, analysts estimates
show Wind River on a more steady climb. The
company is expected to earn 51 cents a share in
2001 and 82 cents a share in 2002, according to
First Call.
Following the Integrated Systems purchase, Wind
River bumped up its expected revenue growth rate
from 30 percent to 35 percent.
Dain Rauscher Wessel's Smith has a $55 price target on Wind River and
said as people begin to realize the potential and demand for embedded
technology, the company will attract more interest.
"Originally, the market was seen as kind of a niche market," Smith said.
"Now that people are addressing the post-PC era, they have gotten more
investor attention."
Even St. Dennis confirmed that getting acknowledged by end users is
tough when the company's name never appears on the products it helps
produce.
No worries, though. The winds of change are a blowing. People are
beginning to understand that a computer doesn't have to look like a
computer to have just as much functionality.
"There's a whole evolution of products coming forward," St. Dennis said.
"Our company is focused on providing the operating systems, software
and applications they can use to accomplish those smart tasks." |
