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To: Ronald Paul who wrote (3148)	5/6/1998 1:16:00 PM
From: g_m10	Respond to of 10309

What bothers me of WIND's stock price erosion because of MSFT CE announcements is that there is a good likelihood that even if WIND announces a blowout quarter, the stock will continue to erode. In it's 10K report company said:" The Company has experienced, and expects to continue to experience, significant seasonality resulting primarily from customer buying patterns and product development cycles. The Company has generally experienced the strongest demand for its products in the fourth quarter of each fiscal year and the weakest demand in the first quarter of each fiscal year. Quarterly revenue levels have increased over the levels for like quarters in the prior fiscal years but have typically decreased in the first quarter of each fiscal year from the fourth quarter of the prior fiscal year." We are coming close to the earnings announcement on May 21. My guess is everything will be great compared to "the levels for like quarters in the prior fiscal years", but "decreased in the first quarter of each fiscal year from the fourth quarter of the prior fiscal year". No doubt, someone is trying to play it right now. MSFT threat will, most probably, be pulled out again by some analysts to explain sequential earnings drop, what actually is normal seasonal event.

To: Ronald Paul who wrote (3148)	5/6/1998 11:02:00 PM
From: Richard Karpel	Read Replies (1) \| Respond to of 10309

Ronald - I don't think the Microsoft CE announcement is behind WIND's recent price erosion. WIND has been underperforming the market for almost a year now, long before there was widespread discussion of CE. I think what's happening is that WIND is still growing earnings at the rate of 40-45%, and it's being repriced by the market, so that its PE is more in line with its growth rate. Roughly speaking, a company that grows earnings 40-45% deserves a PE of 40-45. One could argue that WIND deserves to trade at a premium due to its consistent, predictable performance and its dominance of the RTOS space, but that premium is worth only so much. Right now, it's worth about 15 extra points on the PE. The 100+ PE we saw last year seems to have been the result of irrational I2O exuberance. That isn't to say that I2O won't pan out, but that too many people expected to see I2O revenues too quickly. Unfortunately, right now the market prefers hyper-growth to consistency, and WIND is paying the price. By the way, my wife also prefers hyper-growth, so Ron (Abelmann, that is) -- for the sake of my wife -- let's drop the predictable "WIND beats estimates by two cents" game for the next quarter or two, and report some of those deferred revenues Allen has been talking about.

To: Ronald Paul who wrote (3148)	5/21/1998 12:21:00 PM
From: Bill McEachern	Respond to of 10309

I would not worry about an embedded version of Windows in hubs, routers, switches, etc. given the up-time requirements of these devices and the poor reputation of Windows to stay up for long periods of time (i.e. a year) without need of a reset. Other considerations such as support for multiple processor families, simulation of the embedded software on a workstation, a common set of compilers and tools across the different embedded processors and the simulation environment (and most importantly, access to the source code for all your compilers, tools, and OS), etc. are very important. It will take MS some time to catch up with the current RTOS vendors in this department. One could argue that an NT server is a good platform for network management software to run on but I would still prefer the stability and scalability of a Sun server until at least NT 5.0 is released (and gets patched a couple of times). The way NT 5.0 keeps getting delayed the required stability required might not be there until mid '99. I don't see why MS is going after this market. Windows CE in palmtops, set-top boxes, etc. is a reasonable market since these are sold by the millions. However, routers and switches are relatively low volume devices and probably not worth MS's while to support fully. Perhaps they are spreading FUD again. It would be a cold day in hell before I would recommend putting an embedded version of Windows in a box that I was designing at this time. In a few years I would be willing to look at changing this position but not now. Of course all this is irrelevant to WIND's stock price. It instant I heard the MSFT announcement my gut said short all the RTOS vendors because the competition fears would spook the analysts. I have no position in any RTOS vendor or MSFT, BTW. I'm just an interested spectator. MSFT is a gorilla for sure. If they see value in a market they are not in they will stop at nothing to crush everyone else. Luckily I don't see this happening since I have the hope that embedded software devolopers are wise to MSFT's tricks. My personal opinion only, Bill