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Wind River reports strong year

Dec 4, 2008 — by Eric Brown — from the LinuxDevices Archive — 2 views

Wind River released another solid earnings report in the third quarter, reporting a 12 percent increase in revenues to $91.6 million, and a nine percent increase in deferred revenues to $125.8 million year-over-year. Linux revenues totaled $13.3 million, an increase of 71 percent over last year, says the company.

Reporting on 3Q fiscal 2009, ending October 31, Wind River reported net income of $5.9 million, compared to a net loss of $(0.1) million in 3Q 2007. (More financial details are listed farther below.)

The good news was dampened somewhat by the falling stock market, which has pushed Wind River's stock down to $7.6 per share compared to its August high of almost $13, and a calendar-year start of about $9 per share. Wind River projected that its end of fiscal year numbers for January 31, 2009 would fall between $365 million and $366 million, slightly down from its earlier year-end projections of $365-375 million.

In the earnings call, CEO Ken Klein said that his company expected to see “modest” revenue increases in the first half of 2010, with stronger growth anticipated in 2Q. “We're contemplating lower volumes due to the economy, but continued design wins,” said Klein. “While we are by no means immune from the turn in the macro environment, our solid sales close rates, robust sales pipelines, and our 300 design wins give us confidence going forward.”

Klein noted that the “high volume per unit fees” Wind River claims to earn from Linux smartphone and automotive deals would continue to drive revenue for the company.

A friendly recession?

Later, when asked whether the shift from DIY to commercial Linux platforms would be hampered by the recession, Klein begged to differ. “To a certain extent, the recession is our friend,” he said, pointing to continuing pressures on development teams to write more software, with fewer engineers, grappling with more complex technologies such as multicore. “All this is driving the shift to outsourcing and buying commercial platforms versus doing it internally.”

One notable customer win in which companies are supplanting in-house development with Wind River Linux includes “an extended multiyear agreement across multiple product lines with a manufacturer of multifunction printers,” said Klein.

Additional points from the earnings call and Klein's responses to Q&A include:

  • 3Q bookings showed double digit growth, and designs wins rose from 250 in the second quarter to 300.
  • The $13.3 million in Linux revenues, up 71 percent year-to-year, were driven by strong growth in verticals attached to three major consortia: LiMo, OHA (Android), and Intel's Moblin.
  • The previously announced Kyocera design win for an Android smartphone has now “opened the door for negotiation with several OEMs in the operator supply chain,” said Klein. He also pointed to the announcement of a commercial Wind River Linux platform for Android.
  • The previously announced automotive infotainment deal with BMW has led to “developing a platform for another large European car manufacturer,” said Klein. There was no news on deals with the troubled U.S. car industry, but he added, “We're the piece they need to invest in to drive their efficiency.”
  • Networking continues to be leading segment with “all 20 top NEPs using our networking products.”
  • VxWorks aerospace and defense business “remains solid,” and there has been a “healthy interest” in VxWorks for MILS, with customers including Boeing, Lockheed Martin, and Raytheon.
  • There will continue to be a gradual shift at Wind River from subscriptions to term agreements (which currently represent just over ten percent of revenues).

Other financial details reported by Wind River include net income per diluted share of $0.08 for the quarter, compared to a net loss per diluted share the previous year. Non-GAAP net income was $11.6 million, up from $7.2 million, representing an increase of 62 percent. Non-GAAP net income per diluted share for was $0.14, compared to $0.08 in 3Q 07, an increase of 75 percent. Meanwhile, cash, cash equivalents, and investments totaled $161.2 million at the end of a quarter in which Wind River repurchased 2 million shares for $20 million. Operational cash flows totaled $5.1 million.

Availability

A webcast of the Wind River 3Q earnings and call and additional financial information may be found here.


 
This article was originally published on LinuxDevices.com and has been donated to the open source community by QuinStreet Inc. Please visit LinuxToday.com for up-to-date news and articles about Linux and open source.



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