Wave Systems Corp. (fka WAVXQ)

[DRM]

ASM Notes...from DRM

Sorry I have not had time to post a few thoughts prior to this morning... it has been a busy few days on the home front. I see that many of my fellow wavoids have posted their comments and insights... so I will not bore you with endless details... as I have done in years past. LOL

First of all it was great to see everyone again. I am looking forward to this being an annual get together for decades to come. Weby and Mrs. Weby... thanks again for your hosting and being our guide through the streets of NY.

Before we left the question I had... was if I would have that warm fuzzy feeling after the meeting. I am happy to report that the warm fuzzy feeling is back... and spreading.

You read everyone's notes on Dell/Seagate... new OEM's... Juniper & Microsoft... government...

Critical advances are at a critical juncture... and we were all satisfied with Steven's response to the need for 15 Mill. and I was quite satisfied with Steven's response about competition in the marketplace.

I really appreciated the amount of time that Lark, Steven, Brian, and even Feeney spent with all of us... we had lots of questions and they were quite energetic and clear on their answers...and you could always tell when you hit the agreed upon partly line.

Ok so here was the one item that really got me thinking over dinner...as we processed all of this. Lark is very excited about Seagate and FDE deployment. We are talking in the neighborhood of a million units this year... he indicated that from that launching point... the numbers of drives will increase at a tremendous rate... at one point Steven commented that he simply could not see why anyone (down the road) would not buy an encrypted drive when give the option...

So we were sitting around the dinner table and the talk turned to the first million encryted drives being sold... and there was a sense (I will not name names...) that a large percentage of these drives will then be followed with a full ETS upgrade. If you had 100% full upgrades then that is $50 x 1 million drives. I like to call that scary math... the thought around the table was that we could see 80% - 90% upgrades with these first million drives... I like to settle on 50%. 500,000 drives x $50 = WOW

MATH

* Wave is currently selling 1 mill ETS lite bundles a month... that revenue alone will push 1 mill each quarter in the short term and grow larger
* Wave will be getting somewhere in the range of $2 - $10 per Seagate drive. 1 million drives this year times this potential range. ???
* We had a strong indication that enterprise deals were finally getting some traction. Steven talked about 12 on site demos that have been ongoing and that are wrapping up... this is the wild card. At any time a series of enterprise deals could fall and have a huge impact on the quarterly bottom line.
* Seagate upgrades... in my mind this is the HUGE opportunity right now that we are just beginning to realize. Based on the math above... well this could really get exciting...


Honestly... based on what we heard this week... I think we could see 3 million in Q3 and then Q4 is the wildcard quarter... Q4 could simply be off the charts.


Now... the only other set of comments that I want to re-state is that both Lark and Steven told us that Seagate has the largest profit margin on the FDE drives than any other product they have... and they are going to spend more on the promotion of these drives then they have ever spent on the promotion of any previous drive... Seagate will be driving this market and driving it hard... Wave will just be along for the ride.


Well my Sunday am coffee is done and I am ready to start the day... I hope you all did not mind my ramblings... I guess my comments were not as brief as I had once hoped.

Again it was great to see everyone again and best wishes for the days that await us...

Fasten your seatbelts...
DRM