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Orda - inconceivable
Dame
Personally I think it is nonsense to think that SKS would do something he thought would kill the company so he could earn a few tens of thousands of dollars extra. I don't think you are thinking. If he really wanted to salvage a good chunk of money, he would find a buyer for the company, lose control and walk away with a lot more than a few monthly pay checks.
The issue here is whether a RS, if taken, is guaranteed destruction of the company reagardless of the underlying business model and trusted computing deployment. It's impossible to conclude that it is based on what we know. It seems much more emotional than facts based. Not being able to fiannce the company or other issues raised by the Board seem more tangibly bad.
Don't get me wrong. This is not a good place to be. But we are here and thus we need to make the right next step. Not wish that some other action had been taken three years ago.
Dame
Please explain how going through a RS (which is being projected to be a disaster for shareholders), is a positive option for the biggest shareholder. Are you suggesting getting an annual salry for a little longer is worth the destruction of all his equity compensation.
Micro
As you've read there are a number of reasons that Wave felt delisting to the capital market (or maybe it was actually to the bb) was not in the best interests of the company. It's a judegement call; I can't judge how outside investors, employees and customers would feel. At the outset, I didn't think it would be horrible but that was not a very informed opinion.
The RS conveys all sorts of horrors but when you disect it, the biggest issue is whether this allows shorts to more aggresively attack the stock than before (remembering they have been caught naked once before). On the day of the split, the market cap is exactly the same and the business model is exactly the same. A RS is not the same as "death spiral" financing. But less liquidity would tend to increase volatility.
Do you think that the stock price would remain level if on Friday they announced they had been moved to the Nasdaq Capital Market.
Don't get me wrong. I veiw this as a negative surprise. Not the RS itselff, but the point that Wave beleives being on the National market is espcecially important and worth whatever risks one can attribute to a RS decision. Wheter it is necessary will be clear by July 24th.
liz
I don't recall the %'s but the relationship between the type A & B shares, but it has changed over time and now the super shares control a much smaller percentage.
liz
Not true. Their separate class voting rights doesn't exceed the common shares.
cosmo
A reasonable question is what would happen to the share price if Wave did nothing and they were moved to the capital market. Would it go down 50%+ which is what some are predicting if they do the RS and it drifts back down below a dollar. Is it simply up to the shorts to attack and drive it down but they would leave it alone if Wave simply went to capital market?
The price went up from .50 to .90 when the shorts who were naked had to cover (or were covered). What is going to make all the shares to short now available - which are not available now.
I don't dispute the negative impression the RS is creating but I'm trying to identify the real material changes that will result with less liquidity.
Player
I think there is more to the post. If Wave "needed" to have a 3 to 1 or 4 to 1 rs to just get above a dollar, then it would be effectively in violation with the market cap requirement at that point. So I think the notion was we wouldn't do it because we would (already) be in violation. At least this was the way I read it.
However I think the reality is that if a RS was adopted, the board would want some margin above $1.00 and thus they could chose to get to $2.00 or more by using a larger multiple.
Bluzboy
I agree that it is unsupportable to assume that there is a secret agenda to do anything but what the notice says. Also I don't buy into conspiracy theory either.
This is a negative surprise but I think there have been a number of good clear observations that each investor should consider.
It is quite plausible that the Nasdaq input was that they needed something like this in place or they would be bumped. We have assumed it would be to the capital market but we don't know for sure. I've thought that being on the capital market was not necessarily a real issue from a financing perspective or from a business perspective, but that may not be the case.
Although I have never performed any statistical analysis myself, I think it is widely agreed that a majortity of the companies who undertake this action find their share price dropping and many have not stayed in business viably afterward. However that is not a function of the reverse split itself but due to the universe of companies who have needed to take such action. It may be as simple as if Wave does succeed in selling their product, then it will work and if not it will fail. I'm also not sure whether staying above a buck for ten days restarts the entire clock in this case.
Psychologically there are clearly issues since it is a negative surprise and without additional information, it is reasonable to surmise that meaningful revenues and other successes are not coming in the short term. But not knowing specifically what Nasqaq said and the implications of different actions, that may not be an accurate assessment of the future.
whitewash
In fairness, a slightly different question would be how EDS and Wave were working together today. And in particular as a systems integrator within their Agility Alliance, are they utilizing TPM equipped machines and causing the purchase of Wave enterprise products for their customers.
I can say that they are my company's outsourced IT provider, we are slowly adding Dell computers as new computers are purchased but I have seen no sign of Wave or a TPM strategy. When I inquired, I was told we would be using Pointsec, which is a well regarded file encryption product.
mjan
No doubt there will be a need for key management software for an enterprise. Today Wave would be the answer. However tomorrow there will be other players offering such software as well. Wave will need to continue to improve the value of its products and tie in relationships so that they are not easily displaced.
Interestingly my company will be introducing a product by Pointsec to encrypt our files/drives. It is unclear whether it can utilize TPMs - I periodically challenge my IT department especially following security notices. We're supposed to encrypt and password protect everything but they don't offer any help in terms of how to do it and the implications for working with clients. Just demonstrates the difficulty of implementing and enforcing security policies in the real world.
John
That may not be quite true. Demos they are free to PR all they want. The 8K excercise is likely one of some discretion and a means they found to announce something that couldn't be PR'd and which is far lees likely to generate the misplaced issues that were caused by the older Intel and IBM announcements.
I think its clear that their customers don't want them announcing their purchase of new security hardware and software. That's been true for the other companies like IBM as well. So the question is whether Wave is obligated to put in an 8k, the fact that they have garnered a contract above a certain level. I'm thinking that level could be huge and that there is discretion if it is below some threhshold that we would still find quite interesting. The OEM deals, in theory, are potentially huge (many millions) even if there are no minimumas or up front payments and thus wave could make an arguement that they are material and need to be disclosed. However individual deals for hundreds of thousands of dollars or a few million could be viewed as not needing an 8K and as I've said companies don't want to see their names in PRs under this topic.
So there may be some or many wins. All we know for sure is that they need to turn up in reported revenues when they can be recognized.
CPA
There is a distinction between passing on a rumor that you believe to be true and one where you deliberately make it up to create an impact. It seems that the big objections are to the latter. If a poster identifies a technology that they think might be competitive to Wave, there is often some analysis and a post that addresses the question. Naturally most of the board's readers hope the answer is positive (and I would agree the analysis often seeks a positive spin) but it is addressed in an honest manner.
When posters ask about the delisting process, timetable, possible outcomes etc, the responses are fair and to the point. When someone says that being removed from Nasdaq listing may impact fianncing capability, there is a discussion. But when someone new pops in with a quick "when is ..." , it gets treated as the garbage it is.
People don't even jump on you when you speculate on the stock price. it's only after the outcome is known, that you get a gentle reminder. When you question a cashier as to who pays for a restaurant bill, well you know what happens then. But I do note that is better than going through their garbage trying to read the receipts.
ok
Nothing new. But essentially Juniper supports the TCG protocol and Wave worked with them to build a demonstration of how their technology would work in the TCG environment leveraging TPMs.
Down th eroad when these network systems are being sold with TCG protocols, you'd expect wave to be part of a Juniper sale.
cosmo
It wasn't intended to be reassuring. On the positve side, Wave has and is working with Microsoft so their key management software will work seamlessly with Bitlocker; however I don't think it likely that Microsoft will do something that places Wave ahead of the pack or in a semi exclusive position. The one exception would be if they decided to offer the key management software themsleves (not through "partners") and then decided to license something from Wave rather than starting from scratch. Still Wave is in a good/superior position and could get some acknowledgement from Microsoft in support of Vista.
I think Seagate is a different story. There Wave has directly collaborated in the development of the TPM functionality and I expect something more explicit between the two companies.
The intriguing question will be whether Seagate's FDE product will be viewed as so superior that it garners lots of sales and Bitlocker becomes the lower quality but cheap alternative.
wavxmaster
All of the Wave responses concerning Microsoft have been very textured. My inference is that they still have not reached the point that they have some licensed or semi exclusive agreement with them despite all the hints over the years. Sure they are trying to work as closely as possible and have collaborated a number of times. I'm thinking the best we will get (maybe) is some acknowledgement that there are certified products out there that support Bitlocker including those of ... and wave Systems. Right now wave appears to have a lock on TPM key management but there are other products that manage keys. I think it is inevitable that one or more will extend their products to support TPM keys especially when Vista becomes available for enterprises. Hopefully Wave's will be considered best in class.
If there is in fact more going on with Microsoft, then they are doing a good job of keeping quiet. I must admit my thinking is influenced by the lack of progress with HP. Another company that almost seems in the bag for a long time but which has not gone to Wave in the way we hoped for.
Gowave
You are absolutely right. And anybody prescient enough to see that would have earned millions of dollars. Some of my friends did - too bad I thought I knew so much.
AWK
I think the main issue with each and every one of the alternative proprietary approaches that doesn't fit into the TCG framework is that it interferes or impedes on the rate and scope of adoption. However there really isn't any reasonable expectation that all the big companies won't, at some point, try to introduce something proprietary to improve their competitive position. They will of course offer to license it to other players, but unless it is an unbeleivable improvement or breakthrough, these efforts will be more niche but unfortunatley diluting the pool.
It is fortunate that the TCG has gooten traction from many places. Otherwise trusted computing could be fractured for a long time.
WAVX
From my perspective, there aren't sufficient deals closed now to achieve breakeven by year end. With the deals in hand and the forecasts by their current partners (and assuming a small but not zero upgrade revenue) break even will occur by mid 2007.
Anything before then depends on deals closing, extra mini bundling deals and products sold. There is clearly more than sufficient opportunity for that to happen (perhaps even quickly) but so far past experience is that it takes forever. Since it hasn't happened yet (and its been possible for at least some time), there is no empirical data to do any extrapolation. (unless you look to other technology introductions but that certainly isn't refined enough to fine tune in months).
I think any probing will lead to some disappointment until we see that something material happened and then the whole picture and perception will change completely. And until it does, the risks and uncertainty can remain.
helpful
To be honest, I find the segmentation of the market an impediment for me to buy a computer. I would like to have a computer with a TPM which could use Wave's software. It has short term use and I expect a load of uses in the future. However I don't want to limit what I buy by the way the machines are branded and made. Given the cheapness of the part, it feels like an unnecessary limitation. I should be able to buy any Dell machine or Gateway machine and have it - not just what they define as business units.
And unlike some, I am not about to build my own.
Tampa
Interesting perspective. Infineon is clearing customizing chips for Micorosoft . we saw it with the Xbox and we're seeing it here. However either wave's decade old collaboration with Micorosoft will result in some mutual product/service or Wave has been wasting a lot of time. It is not inconceivable that wave's products would work with the Infineon chips and it is their software group that is out in the cold. We'll soon see.
I'd also note that Intel trying to push their own platforms and working with Apple. And Dell finally opening up a crack to AMD demonstrates that nothing is forever and that alliances do change if the current ones are not producing the economic benefits expected by the parties.
OT helpful
I used to consult to Mitre years ago - but not in technology. Clearly a well established company that works in the government space in sensitive areas.
OT OT Dhamster & Doma
Please email me as your email account that I have is bouncing back.
Trader
If we don't have a million dollar quarter in Q4, I would truly be surprised and very disappointed.
Trader
I would expect a profit margin of 50% + as revenue increases since their costs are largely fixed. If they start ramping up at this level, the PE multiplier would be well north of 10. Besides, the shock of seeing that type of sustainable revenue from Wave would provide extra momentum. If I wasn't a poor slob, I'd offer to buy as much as you could sell me at $13 a share if and when Wave hits 260 million dollars of sustainable annual revenue.
Kisamura
Actually I think the question is whether there will be activation revenues to speak of by the end of the year. Not how Q2 turns out. For Q2 you'd like to see evidence of dell shipping computers and wave starting to get their licensing revenue which has been nill to date.
CPA
Gateway seemed to be late in their whole execution of their security suite and so it's quite possible that real revenues from them won't start appearing until Q3. But to think the stock proce will fall like a rock if Gateway revenues aren't strong in Q2 seems absurd to me.
You are not taking in the whole picture.
kisamura
In the situation you described, I+ would not wait for a new OS. If there were a sufficient number of TPM PCs, and I was concerned about the security matters raised, I would start using the tools. The OS ( and I assume you mean Vista) would not really add much to the situation that is worth waiting for. Everything you need is available today to get going.
Now if instead you asked will companies stop buying any PCs until Vista is available, then that's a different question. I think that may have had some merit in the past. However given Microsoft's track record and the noted expected delays, a company would have to be crazy to simply wait, do nothing and hope that it will become available sometime in the future.
kisamura
I think the timeline has been well articulated by Wave. With minimal activations, it may take as long as Q2 2007 to breakeven. With more activations it will be shorter - perhaps as early as Q4 2006. With no history to rely on, it is dependent on forward looking events. However there is plenty of PC selling to enterprises going on right now and there are enterprises testing and starting to use wave's software in a network setting. The first public sign of sales may just be when the quarterly results are published.
In the meantime, besides revenue there are plenty of possible deals which could be announced in the meantime. Many of those possibilities would be material.
Unless there are some very adverse detours, funding the company without giving it away seems more assured than ever.
CPA
It didn't take wave 4.5 months to do anything. It took Dell a certain amount of time to introduce a whole new product line including global marketing. The agreement was made and announced in the 8K at some point during that timeframe. I'd be astonished if Wave was the reason dell delayed its launch or decided to do it in April. You are not thinking now.
Cosmo
We're all in agreement with that hope. It does seem however that it is not Wave as the primary hurdle here; you can see the movement in different vertical sectors as well as the nonsense that goes on in government procurement.
CPA
There are a number of entities that will be licensing Wave's products. During the quarter's that you noted, I believe the bulk would be from STM and a bit from Intel. With a new licensing agreement from Dell and the initial launch of their PCs including the Wave bundle starting in Q2, that is when one would expect a beginning contribution from them. Gateway should also begin the process in Q2 or Q3. So the apparent small drop you noted would seem to be attributable to something from STM. That could in turn be related to their customers - to the extent Dell's launch was later than planned, they may have ordered less STM chips. Also with the new Broadcom deal and Dell starting to ship, we should see some revenue from that OEM as well.
I think it is premature to see red flags now. However your point is valid if later on we can see clear trends from multiple vendors and it turns downward.
Cosmo
what are you talking about? Both types of TPMs are being sold and there is no paralysis. And of course Wave doesn't sell any of them. I just don't understand what you are getting at other than generic impatience.
AWK
I'm sure they all meet minimum security specs. However perhaps due to the integration, signals from the TPM cannot be as isolated than in the discrete design. That's what I think I can recall from a conversation with Wave. But it may be something else in terms of relative comparisons of TPM types.In addition unclever's comment is another obvious reason that more haven't switched immediately.
Orda
see my comment on security.
stfzf
Wave has been said that the discrete TPM can provide better security than the integrated chip. I'm not sure I remember exactly why. Thus discrete chips may be used in highly sensitive situations. Other than that, the integrated chip seems to have all the other benefits.
Cosign
It really looks like the TCG is acting as a consolidator here and that while individual companies will come out with their products and services, the open standards process seems to be a glue. TCG will not per se promote some ooffering but it appears that many organizations are using it as a guidepost. Maybe it will serve the role that Microsoft used th have -- that is they would create something and then an entire eco system would be build around their standard.
Wave interestingly is hidden within the structure but apparently vital to its operation.
cosign
i do not think it will dribble in becuase you need a certain ubiquitous framework to make it work. I think we've crossed the tipping point in this regard. People are now very aware and concerned about security issues since it is hitting home more and more. The government also gets it too. There are major commercial businesses who view this as one of the better applications to generate significant revenue and the underlying strucutre offers great promise for future commercial applications. It will continue to take some time to implement but I think this is going on very broadly and thus wide spread tangible results will come at some point.
rick5
I've wondered from time to time just what engineering collaborations Wave is doing with other key players. Obviously Intel is high on that list. I think the public comments and information in journals is giving us insight into some of those activities. I agree with your comments. I think it is a clear example of the real competitive advantage Wave has in this space. They are part of a select group with a vision and a deep understanding of how trusted computing can be implemented and what it could do in the future. They will not easily be pushed out if they continue to execute well.
Greg
Awk's well documented summary actually drew me towards some of your comments.
I keep thinking that you pretty well understand the direction Intel is going with their developments and thus the role of LT and virtualization in the trusted computing evolution. But you are not totally in step in how Wave is working with Intel and what valuable elements Wave brings to the table to enable trusted computing to actually work in practice.
The potential picture dovetails with a lot we've heard over the year's from outside and inside of Wave. And it bodes very well for the future for investors in this company. Of course we have to get there but the path looks clearer and safer than ever before.