CEO Ken Klein’s remarkable record in turning around embedded systems specialist Wind River Systems Inc. continued in the second quarter and a forecast of continued expansion for the rest of the year led its stock to climb 20.9% to $9.95.
The company posted net income of $2.33 million in the quarter to July 31, up from a loss of $9.28 million on revenue 17.9% higher at $59.44 million. Earnings per share were $0.04 while Wall Street analysts expected a loss of $0.02.
With profitability set to continue, Wind River expects third quarter revenue to be at least 15% up at between $57 million and $illion, though growth will slacken to around 8% by the fourth quarter when it expects revenue to be between $60 million and $62 million.
For a company that has been in decline over the last three fiscal years, when it was hit by the decline in telecoms equipment sales and the squeeze from Microsoft on one side and embedded Linux on the other, the burst of growth is astonishing.
Klein has lessened the company’s dependence on telecoms and embraced Linux in a partnership with Red Hat Inc. Microsoft’s inability to make substantial progress in areas where it does not have a monopoly has undoubtedly helped the company. However the big lesson of Wind River is that regardless of market conditions there is no alternative to a talented CEO.