Replies to post #211301 on Wave Systems Corp. (fka WAVXQ)

[barge]

Internet---Fascinating drama at the Shareholders Meeting. And I can vouch for your ability to express yourself in no uncertain terms your thoughts and feelings face to face with management. I recall a number of years ago a lunch with S. Sprague and Lark Allen where I almost swallowed my fork as you discussed in a very no-nonsense tone the ruinous impact of continuous failed projects has had on Wave's poor reputation and dismal marketing impact.

I followed your lead and slammed into Lark Allen by designating him the Father of Trusted Web Services.

[internet]

After the voting numbers were made public....SKS gave his formal presentation. There were a few interesting comments:

SKS's desire is to grow Wave's top line and CASH position at the expense of short term profitability. Any cash from operations will be plowed back into growing the company. According to SKS....the sale cycle is taking about 6 months....and it costs the same to go after the smaller to middle size contracts vs going after the larger accounts. Therefore....it's a greater roi to go after the larger ones at this time. The added benefit is that if we get the number one or number two company within a given sector...it makes it easier for other companies in that sector to also make their decisions to change to a different technology rather than staying with the status quo. Wave is currently engaged with a number of large european companies who are at the end of their decision making process. What does this mean??? Well....the answer to this question helps to explain why the process has taken so very long to close those 5-10 deals.
The example that SKS gave us involved the european company that ExPat has described as being BP (Which I agree with based on what SKS said) According to SKS.....going after these contracts has actually been a two pronged process. The first goal is to convince the potential client to abandon their software encryption products and change to a brand new technology...SEDs. The company inquestion agreed to make that leap...purchase SEDs back in Nov. of last year through the efforts of the Wave's sale force. Unfortunately...instead of giving the contact immediately to Wave for management of the SEDs...the company in question opened the process up to 10 different companies to compete for this portion of the contract. The current situation is that there are only two companies left in the running....Wave and one other company. According to SKS....it's Wave's contract to loose. He believes that there is a small chance the deal could close in Q2 but will most likely slip into July.....Aug 1 in the worst case. This second phase has taken a much larger time than management had thought. Unfortunately.....a number of the larger potential clients are going down the same path. The point is that Wave is at the end of the sale cycle on a number of potential deals which have taken a great deal longer than anticipated by management.
General Dynamics.....GD is one of the most important DOD intergrators. It currently is the number two company in terms of generated revenue in the Trusted Computing space....Wave is currently Number one. According to SKS...the GD event last week was VERY IMPORTANT!!! In order to understand why it was so important.....one needs to have some background info. A couple of years ago....the NSA funded GD with 20-30 million dollars to help develop the HAP program. The thinking of the NSA was that once the platform was developed...GD would become an evangelist for TRUSTED COMPUTING. Unfortunately.....that did not happen at the speed the NSA had hoped for. After receiving heat from different levels of governemnt...GD has finally taken up the TRUSTED COMPUTING mantel. During the first few minutes of last weeks event....the rep from GD made the following remark....going forward...GD INTENDS TO USE COTS TRUSTED COMPUTING PRODUCTS BASED ON TRUSTED COMPTING GROUP STANDARDS in regards to their clients. For the FIRST time....we have a DOD intergrator proclaiming the importance of the TCG standards. The next 8 slides of GDs presentation were from Wave's information for the TCG. According to SKS...GD will have significant things to say about their plans during the upcoming NSA event in Sept. Additionally...this will FINALLY spur the other DOD intergrators to finally take the TCG seriously.

All in all....this was a very productive SHM. It provided us with greater clarity as to why things were moving slower than what we had all hoped for......but make no mistake....as Weets likes to remind us...things are HAPPENING. Use this weakness as a buying opportunity......

Sincerely,

Jas

[CT_Yankee]

Jas, As always succinct, objective, and very well stated indeed! Best Regards, Fred (we met at E3 many years ago)

[go-kitesurf]

J, Good morning. Thanks for posting this. I am pleased to hear there was more an honest debate this year.

ALL of the hard ball questions asked during the formal portion of the meeting were asked by the "old timers".....

May I ask what hardball questions were asked?

[jermart]

If this is a repeat question Im sorry I thought I saw it posted earlier I cant seem to find it now. What were some of the tough questions asked by the old timers thanks in advance.