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

To: Peter Church who wrote (9280)	3/3/2001 8:01:42 PM
From: James Connolly	Respond to of 10309

Transcript of CNBC- POWER LUNCH WIND RIVER SYSTEMS (WIND) CEO TOM ST. DENNIS ON THE COMPANY'S EARNINGS MARCH 2, 2001 SUMMARY: St. Dennis comments on Wind River's royalty revenue. He discusses product development and innovation. He then comments on barriers to entry and the company's competition. Ted: Embedded software maker, Wind River is beating Street estimates by a penny for its latest quarter. After yesterday's closing bell, the company reported fourth quarter profits before non-operating charges of $15.5 million, or 19 cents a share versus $4.5 million, or six cents, in the year-ago period. Revenue also grew 43% to $130 million. Net income rose 244% to $155 million. In separate news, Intel chose Wind River's software over Microsoft's to run in its new wireless Internet device, the Web tablet. Here to talk about earnings and strategy with us is Wind River's president and CEO, Tom St. Dennis. He is joining us from Palo Alto, California. It is nice to have you with us. Congratulations on these numbers. Thank you, Ted. Ted: What is your take on the data and specifically where was the strength? I know royalty revenue was part of it, but where else was it? I think the strength is just throughout the embedded industry right now. A lot of innovation is going on and a lot of new product development going on and all of that feeds to Wind River's strength. Ted: You've been quoted as saying, quote, in the midst of an uncertain economy we see positive growth. How are you managing that when so many others are having a hard time? You see now a lot of reduction in investments and capital markets and things like that. What we see customers doing in these kind of times is really driving new product development and product innovation and tremendous, tremendous market growth out there in this whole world of smart devices. People are moving off the desktop to all the different applications. There is a lot of development going on and that plays very much to our strength. Ted: Let me make sure I read this right here. I find this interesting, a good number of Wind River systems major customers pre-announced earnings short falls an ABN Amro analyst downgraded the stock Tuesday to a hold from an add based on substantially reduced outlook for the sector. He notes that 61% of the revenue derives from Internet infrastructure clients like Intel, Lucent and Motorola. Why is he wrong or is he not wrong? It goes back to the issue between capital spending and innovation. What those companies are seeing today is substantial reductions in capital investment and various segments of the market. What is going on inside those companies of course is that they are driving hard to bring out more functionality in the products and also bring out the next generation of technology. So, when they see that capital spending decrease that really drives them on the innovation side to bring out new product features and bring forward new opportunities. Particularly for companies that are behind or are really trying to fight it out in the different markets. Ted: He is wrong, you are saying? We believe that he sees the capital side it, doesn't see the innovation side of it. Ted: I should say that in all fairness the Hambrecht analyst believes the performance is notable especially in a market environment the companies are failing to meet expectations. He is reiterating a buy rating and a 12-month price target, be fair and point out the other side there. If you can talk to Alan Greenspan, what can he do to make your business better? I think the focus is on getting the capital markets back to a more balanced situation. Right now the contraction on capital spending is so strong that I think that probably the interest rates focus is going to need to be kept to continue the investment going forward. Ted: I have an e-mail question from Dave in Texas who wants to you comment please on barriers to entry competition for your area. The barriers to entry, I think is really that you've got to be focused on this industry. We've got a 20-year history and really we're embedded systems and a company at our core. So, we are quite committed to it in the industry, as a result, we've got a real legacy of all the products and technologies that take some time to build up. I think that plus our channel really is substantial advantage for us. I don't know if it is a barrier to entry, but it is a substantial advantage. Ted: Thank you. That was Tom St. Dennis, president and CEO of Wind River Systems. Here's how shares of Wind River Systems have traded over the past year. It is now at $28.94.

To: Peter Church who wrote (9280)	3/3/2001 8:02:16 PM
From: tom ablett	Read Replies (1) \| Respond to of 10309

I see there are still over 1300 open MAR30 puts on WIND quote.cboe.com I'm really surprised that they weren't sold when the stock was down in the low 20's. Is it possible there's some bad news coming out in the next couple of weeks or are they betting on a Nazdaq tank or are they just making a bad bet on the company. Maybe they fell asleep at the wheel and forgot to sell them, dought that. This is fishy, don't you think. There could be some interesting movement in the works. Tom A.