Since its Q4 earnings announcement in early March, the stock price of Wind River Systems (NASDAQ:WIND) has ebbed from $15 to $9.27. Unfortunately, CEO Ken Klein opened yesterday's first-quarter conference call by describing the latest financial results as "mixed," with little improvement in sight. The market hasn't responded kindly; Wind River was down roughly 12% more in early trading.

In the first quarter, revenues increased 5% to $65 million, and there was a net loss of $2.1 million, or $0.02 per share. As with many tech companies, Wind River's GAAP results were reduced by stock option expenses, which knocked off about $5.1 million. So while the $0.02-per-share loss looks troublesome next to the $0.02-per-share gain in the year-ago quarter, a better indicator of the business is on the cash from operations line. There, the company collected roughly $13 million, compared to $11.2 million in the year-ago quarter.

Wind River's "device software optimization" (DSO) business attracts a diverse group of customers, including manufacturers of TV set-top boxes, automobile braking and navigation systems, Internet routers, avionics control panels, and coronary pacemakers. Wind River's software helps these customers develop and manage complex devices -- making them run more quickly, with higher quality and lower costs. More than 300 million devices have Wind River solutions inside, and customers include such biggies as Apple (NASDAQ:AAPL), Hewlett-Packard (NYSE:HPQ), Boeing (NYSE:BA), Motorola (NYSE:MOT), and even NASA.

Interestingly enough, Wind River's main competition comes from its potential customers. For example, set-top box manufacturers will often decide to develop their own software to run their devices, leaving prior providers out in the cold.

For the past few years, Wind River has told investors that companies will increasingly outsource their DSO needs, especially as devices get more complex. That would be a boon for the company, but it hasn't materialized yet. True, it often takes time for companies to transition to new approaches, but keep in mind that device manufacturers see advantages in having control over their own software systems.

In light of this trend and the fairly lackluster second-quarter guidance from management, Wind River looks like a mature high-end software supplier with limited growth prospects. This is hardly the hallmark of a growth stock, and investors are ratcheting down the valuation accordingly.

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Fool contributor Tom Taulli does not own shares mentioned in this article.