Wave Systems Corp. (fka WAVXQ)

[internet]

MIB....I'm encouraged and dissappointed at the same time. I believe that based on Dells outlook yesterday...our bundling fees should increase in Q3...remember that Dell had a very good July...which is the end of their quarter whereas it's the first month of our Q3. We need Dell's numbers to increase by at least 400,000 units to make up for our shortfall of ~350 K dollars from the servicing contract that finshed in Q2. Based on Dell's forcast...this should be no problem. Additionally, for every FDE/encrypted SSD that Dell sells...Wave will get ~7 dollars/unit. Furthermore...from what I have learned...Wave is getting between 70-100 dollars/upgrade. I DO NOT KNOW IF THIS INCLUDES THE YEARLY RENEWAL FEE.
The most important development in my opinion that has taken place in this quarter has been Dell's public push for encrypted drives. From a sales(DELL) perspective....it's not going to take a great deal of units on a percentage basis to have a very SIGNIFICANT impact on Wave's bottom line.

The most discouraging aspect to Wave's bottomline has been the nearly non-existant activation rate of deployed TPMs. I have yet to receive a valid explanation as to why the companies that are deploying FDEs and have bought ERAS have not activated their existing TPMs. Remember that they have already bought the server. Maybe this will happen with time and education. Unfortunately, I believe that it will take something like a government mandate to take control of their existing TPMs followed by a mandate for any company doing business with the feds to also activated their TPMs.
In short...I believe that we will be cash flow positive this quarter. I believe we will see good Qvs Q revenue growth for quarters to come. If FDE sales can ramp up to 50K/month....Wave has the potential to dramatically ramp up it's revenues in the next 6 months.

Sincerely,

Jas