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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: tinkershaw who wrote (39446)	2/17/2001 3:47:56 PM
From: Northern Marlin	Read Replies (1) \| Respond to of 54805

Hi Tinker, WIND has been amortizing the acquisition of ISI at an accelerated pace. For fiscal 3Q01 ended 10/31/00 they amortized $28.5M. That's why they report "pro forma" numbers along with actual numbers: to separate acquisition-related costs for analysts and investors. Please post if you discover changes in your ROIC projections. Thanks, Phil

To: tinkershaw who wrote (39446)	2/17/2001 11:33:26 PM
From: the hube	Read Replies (1) \| Respond to of 54805

Re: WIND's ROIC: For a company at the stage of WIND, I would think that you might also want to make an adjustment for R&D. WIND currently spends almost 20% of revenue on this item. Ultimately, I think you end up at a point where you have made so many "pro forma" adjustments that you end up not really having anything that is meaningful to compare. What I think is relevant is trying to determine how much of a lock WIND has on the embedded systems market, and looking at what may endanger that lock, if in fact it has one. WIND currently has about 35% of the embedded systems market. No one else has more than 5%. My concern has to do with Linux, Microsoft and similar items. If WIND can maintain its share, it will provide a market beating return for years to come. If it can't, and its ROIC skyrockets for a year or two because it cut its R&D budjet, that won't make it a good investment. My current guess is that WIND will have a disappointing quarterly report at the end of the month. It gets a great deal of its business from the telecom area, and it is hard to see the problems of that industry not being reflected in WIND's earnongs, outlook, or both. I don't think it has much to do with the long term prospects for WIND, as it does nothing to its competitive position, but I do expect the stock price to take a dip. Since I'm not planning to sell, I'm not terribly concerned, but if I were looking to invest, I would probably wait until the beginning of March.