Wave Systems Corp. (fka WAVXQ)

[EarlyLook]

Newbie Offers Theory on Early Indicators

Full Disclosure: a friend who has a brother working for a Wave partner recommended this stock to me so I grabbed 2500 shares without much due diligence. But! I asked another friend at Dell whether this technology has legs and while he was aware of it, he wasn't making love to it. For now, I have a small bet but I might be willing to increase my stake if I can get some clear information.

What follows is how I think anyone interested in this stock could conduct a little bit of due diligence. I'm an amateur at this...for purposes of your own investments, assume I'm just another babbling idiot on the internet, because I am one. Also, if anyone sees any holes in this approach, please let me know. If you can make the subject of your forum reply start with Reply to Newbie that would be great.

My biggest concern with this company is whether or not the Federal Govt is adopting it quickly enough. I would like to see Wave share more information about WHO within the US Fed govt is using it so one might back into why they are using it (besides the obviousness of the need for the product) relative to other options available. It doesnt seem to be on the DAR BPA.

Now, the juicy enticing tidbit to a newbie like me is Admiral Bobby Ray Inman is on the board and has ties into the intelligence community that run deep. He used to run NSA. Top Dog. Nice. He's a really old fart at this point though...could he break a hip getting off the plane at BWI for his visits to Fort Meade? (j/k) If Wave can't get traction with NSA while having the former head of NSA on their board, then watching this company will be like watching grass grow. I notice CEO Sprague mentioned NSA in his speech from March 1. Does that mean they are a customer Sprague? Dont drop that name Sprague if there is nothing in motion there.

Getting the NSA on board is the absolute key to getting the rest of the federal govt in line. Why? Because it allows federal sales people to call other agencies and say, "I"m so and so with Wave, we provide a management solution for SED. We provide this for NSA, CIA, etc etc" You say that to DoD or DHS officials, and you get meetings and you get deals. In the IA world it is a true snowball effect.

As Wave develops it's federal business, you should be able to gleen possible early clues from the way the govt conducts purchasing. Keep an eye on:
fedbizopps.gov
www.fpds.gov.

FedBizOpps could be a hell of an early warning system for major Fed deals. This is where the govt advertises it's purchases in advance. Based on descriptions, you can sometimes back into deal sizes. Not a science...but an art. FPDS is a forensics tool for possible use figuring out where Wave systems is already in use. So far I haven't found any smoking guns...which concerns me. Some FOIA requests might answer these questions. That's too much effort for me but maybe some of you freaks on this board could step up. I wont hold my breath. Hence, I'm asking Wave & Sprague for additional transparency here. How about it Sprague?

Sprague and team seem to be touting regulations which could force adoption of this type of product solution. What surprises me is their first? large? enterprise deal was with an automaker?? WTH? Where I want to see the big deals coming from is the Financials/Banks in New York City, London, etc. You give me one of those....of at least $2.5Mil and I'm upping my investment. However, I notice Wave is advertising for sales people jobs in that NYC/NJ area? Does that mean they dumped a poor performer and no one is at the wheel? Or are they simply adding head count? Again, we need some insights from Sprague and team.


Next, and I havent been able to verify this yet so I'm just going to put it out there. Whoever is running sales at Wave had better have a track record of taking a $10-20Mil company and turning it into a $100M company at least 3 times and one of those times, it should have been closer to $200M. If their head of sales is someone Sprague played ping pong with in college, this is not a serious company. Who is their head of sales and what is his past performance? Ok, the Wave website finally came back up (maybe crushed with new traffic? maybe not enough security? maybe my pc? )

Looks like this guy Brian Berger is running sales and marketing. Note to Wave: no serious company executing growth has a single person marketing AND selling. Also, 8 yrs ago, looks like Berger was at Ethentica for 4 yrs at the height of the IA fear boom. They had an agreement with Lockheed but I only see 2 deals for them in FPDS meaning even with the largest defense contractor...well, i wont finish that thought...I just dont see any traction.

So, Berger has to go. Sorry Berger. It's just business. Yes, you can stay on as head of marketing but Wave desperately needs a sales pro to grow this damn thing. I might just sell my stock right now. Nah, j/k... something is afoot here...I want to figure it out. Berger, no offense, but you probably realize the need for a dedicated sales veteran more than anyone.

Wave, you have this interesting residual income from Dell. But have any of your reps been invited to any meetings WITH CUSTOMERS of Dell? That should be mandatory. You only get meetings with Dell if you get your Dell counterpart meetings....good ones. This is a metric Sprague should report each quarter---are your sales reps working with dell's reps on joint enterprise solution sales. Is there any traction? Any wins to note?

I would like to understand from a technical point of view what is the significance of the Intel & HP relationship relative to the Dell relationship. Can someone explain that? Secondly, have any enterprise deals come from these relationships?

I guess the last thing I see here is the revenues are so small this thing could swing quarter to quarter if a single big customer holds up a purchase.

Ok, I think I can put my finger on a problem. You've got Sprague out there on the internet with YouTube demos that he's performing himself. Not even the CTO is doing that....that means Sprague is a little too close to his baby. Sprague, let go of little crap like that and focus on getting your sales effort up and running. YOu need to be on the phone today with headhunters asking for one thing: I need a guy to run sales that has grown a company of our type to X sales in 3yrs at least 3 times. IA background.

When Wave announces a sales veteran with a proven track record, I will increase my stake in Wave.

Technology does not always translate into sales. Only techies like Sprague seem to think that. You need people with relationships among large customers who can get meetings and build pipeline. The references from Dell, HP and Intel will impress the technical buyer but the decision maker buys things from people he knows and trusts....not guys who spend half their day marketing. In many cases, the technology doesn't even matter.... it's a feet on the street issue.

So I think all in all, I think I'm in a little early...took my friend's advice a bit too seriously. But something seems to be up with this company.

Another thing: even if they dont have a serious sales head....at this low revenues, things could easily jump up in a quarter to quarter basis. That's what makes this interesting. Seemingly solid technology in a market ready for it....just need the people to go get it.

Do they have the horses though? Sprague, when you report earnings, I want to see you announce a search for a dedicated sales veteran. They need existing relationships with large companies and ties into HP/Dell. But it can't be a former Dell or HP person.

So, i just looked at jigsaw.com. I see a Kevin Baxter as VP Sales. I can't find anything about his background. Why is the head of sales in Silicon Valley? Newsflash: there isn't anything in california worth stealing. Move VP position to east coast. Holy cow, I might just flush these shares right now. No wonder they had all the shares issued....there's no focus on sales. They think this thing will grow just by building a better mousetrap. Somebody please shoot me.

Ok, I'm kidding a little. Someone send this post to Sprague and advise him to start slowly untightening his white knuckles on this thing. Let some people who know how to grow companies come in and grow it. Stay focused with the technology piece of course since you're such a genius...but honestly, let's get a reality check here. And quick!!!


I'll be selling longer versions of this post for $999.34 starting tomorrow. Send a self addressed stamped envelope along with approximately a thousand in cash to the following PO Box. I'm only kidding, Francis.