Wind River Systems (NASDAQ:WIND) watched its stock price get cut nearly in half between March and July. It has recovered a bit since then, but investors still appear to be skeptical about the software developer's prospects.
In the fiscal third quarter, revenues increased 4% to $70.6 million. However, because of its ongoing stock-option investigation, Wind River did not provide any disclosures on its net income. In fact, management does not expect to file its third-quarter 10-Q on time. The company generated about $15 million in cash flows during Q3 and has $231.4 million in the bank.
Founded in 1981, Wind River is a developer of device software optimization (DSO) technologies. Essentially, this type of software handles operating-system functions for devices such as cell phones, set-top boxes, and even coronary pacemakers. Customers include biggies such as Apple (NASDAQ:AAPL), Hewlett-Packard (NYSE:HPQ), Boeing (NYSE:BA), and Motorola (NYSE:MOT).
Clearly, Wind River is a leader in its category. The problem? Its competition is actually its own customer base, since many device manufacturers create their own DSO systems. The company hopes that this situation will start to change. If it did, it would serve as a nice catalyst for growth. But so far, making headway has been a slow process.
For the past year, the company has also faced the challenge of restructuring its sales force. In the third quarter, a few new salespeople failed to take some simple steps that would have boosted the quarterly revenues, but that looks to be only a temporary problem.
On the conference call, management did indicate that it is having success in signing larger DSO deals. But these deals will require time before they can have an impact on the revenue line. Thus, as has been the case with this company over the years, it looks as though real growth is deferred yet again.
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Fool contributor Tom Taulli does not own shares of companies mentioned in this article. He is currently ranked 288 out of more than 15,000 participants in Motley Fool CAPS, the Fool's new stock-rating community that you can join for free.
