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

To: Peter Church who wrote (8707)	10/25/2000 11:53:55 AM
From: Allen Benn	Read Replies (2) \| Respond to of 10309

This is the tale of two economies. One, running too swiftly, has been pounded by six Fed rate hikes in lockstep with a 100 more by central bankers around the world. To make matters worse, OPEC has lowered the boom on oil with spiked prices acting like a broad-based tax hike. If oil continues its meteoric rise, there is no end to the havoc it will create. The other economy finds itself at a singularity in the history of mankind. The convergence of two of the greatest revolutions ever to impact mankind takes the meaning of synergy to a new level. Either revolution, appliance computing or digital communications everywhere, individually has the potential to change everything we do in all walks of life. The convergence of both revolutions makes for possibilities that are simply beyond imagination. The coordinated heavy-handedness of the world’s central bankers get most of the credit for the first economy’s global slowdown you fear. Since their actions are self-induced, they will be reversed when appropriate. At the first hint of a reversal, global stock markets will rally in anticipation of a green light for global economic growth. In other words, the negative view of the first economy is entirely and purposely caused, so why fear it. The Asian crisis was scary because of its potential to run amok among the world’s economies; self-imposed slowdowns are healthy and are nothing to fear. If you believe oil will continue to sky-rocket in price and OPEC will dominate the world, then you should sell everything you own and retreat to a cave. The oil crisis will be short-lived, all the more so because the Saudi’s and most other OPEC members want it that way. I won’t explain this now, but I will if you have any doubt about this. I don’t think individual investors should worry about the current state of the world’s economies. Consequently, I believe investors in technology need to focus on finding reasonably priced companies comfortably “on the right side” of technology. Revolutions are underway, don’t get stuck in old technologies. In reality, there are not two world economies, the first one is the work of a handful of government decision-makers and therefore surreal. It can and will be reversed in a heartbeat. Investors should focus on the second, real economy, confident that Greenspan and OPEC will not, and cannot, destroy forces greater than anything previously encountered. I can’t imagine a better set of circumstances for finding and buying technology stocks. Allen PS – In the event that the bankers overplay their hands and bring the curtain down on the global economy, almost all companies will under-perform compared to prior expectations. WIND should be able to squeeze by in such a crisis somewhat less affected than the company was by the Asian crisis. There are two reasons for this: 1. With ISI gone and WIND owning the embedded market place, WIND can withstand desperation moves by the competition. Particularly during an economic slowdown, most customers can’t afford to mess around with cheap, non-mainstream solutions. If you can only afford one play, you must stick with the mainstream. (This is why secondary players get killed during periods of economic slowdown.) 2. WIND has gone vertical for high-revenue and volume growth. Most of these new markets are in embryonic stages of development and will grow significantly during a slowdown. Revolutions don’t stop because Greenspan is worried about inflation. A perfect example of this is the DSL space. The stock market has crushed this space recently because they can’t get the boxes installed fast enough to live up to revenue expectations. I’ll concede DSL growth rates may be overblown given the complexity of installation, but I will not concede that DSL modems are not slated for a major role in getting broadband communications into the home. If I am wrong, then it is only because cable modems, fixed wireless, optical or something else that proves to be superior beats DSL to the punch. WIND will be the driver behind whatever solution succeeds. Remember, when WIND got pounded during the Asian crisis, its revenue growth rate never went below 20%. The only reason profit was off so much was that management reacted by investing. This kind of performance means the company is recession-proof. Couple this with the above two changes, and it is anybody’s guess what the stock market would do to the stock price the next time around. What is not a guess is what the stock must do with the company when WIND’s market position becomes clear to the Street.