Just returned from the SH meeting. I will leave the technical details to others, notably Weby, to relate their impressions, but the following is my brief take on what I though was important to me.
Wave is pursuing income from 3 distinct paths.
1. Income from the chip makers like Intel, etc. where they will be paid a fee on each chip shipped, regardless of whether the Wave’s services are used or not.
2. Once the computers with the WAVX enabled services are in use, subscriptions will form a second level of sustaining income.
3. Future, potentially enormous revenues are possible when large networked subscribers require Wave services. Considering large corporate networked computers requiring security key, administration, etc. SS considers this as an almost unlimited market.
In addition, SS stated:
1. Wave will definitely be shipping platforms in the 4th quarter. This is fact, not projection as in previous estimates.
2. 2004 shipments will reach 1 mm units per month, but will not average an annual 12 mm units per year because shipments will not ramp up to 1mm per month until later in 2004.
3. Entire market potential is in excess of 100 mm units. As examples as to how long Wave might take to penetrate these markets, SS noted that existing experience in the computer industry is 3 years as the fastest growth rate potential versus slower 7 years for industry to accept and support USB technology. SS believes Wave’s potential is closer to the 3 years than the 7 years to capture a major portion of the market.
4. 2005 shipments are estimated at 30 mm units per year.
5. 80% of users will spend $20-40 per seat to buy trusted computing management services
6. Once Wave establishes a net positive cash flow, they will spend every $ possible to maintain a preeminent position in the TC field. When asked how this would improve stock price, SS stated that increasing market share, not necessarily EPS, would drive stock price. I interpreted this to mean that we should be looking at increasing sales, not income, as a sign that Wave is growing and prospering,
7. Regarding financing to support Wave’s current burn rate, SS stated that the recent increase in share price has made him more comfortable that the Company has access to money on that front. Notable to me was SS statement that there were “… strong partners interested in helping on that front”!
8. Also important to me was SS last comment that Wave has “… a great relationship with HP and stay tuned for more!!”
I have been an investor in Wave since December 1995. After hearing SS talk about his vision and the future potential of the Company, I still maintain my enthusiasm for Wave.
By the way, 99.5% of shareholders approved the nominees, and a similar number approved the increase of shares from 75 to 120 mm. I have to admit that the overwhelming approval percentage surprised me.
Unfortunately I could not stay around for additional discussions after the SH meeting since I had to take my wife to dinner in NYC in return for attendance at the meeting.
I have quietly followed WAVX on Raging Bull and now on the Investors Hub for years and am glad that I can finally contribute to the discussion. Hope this helps!
Knute 97
AI
