CIBC Cuts Wind River Systems to Sector Perform

Analyst Brad Reback is concerned that a key growth metric -- billings -- appears to be decelerating

CIBC downgrades Wind River Systems (WIND) to sector perform from sector outperform, citing disappointing fourth quarter results.

Analyst Brad Reback says that despite strength in the company's subscription business, revenues missed his estimates and the company's earlier guidance. He is even more concerned that a key growth metric -- billings -- appears to be decelerating, following a pattern of deceleration over the past five quarters. Given the fourth quarter shortfall and what he considers a tepid outlook, he cut his 45 cents fiscal year 2007 (ending January) earnings per share (EPS) estimate to 40 cents, predicated on lower revenue and margin assumptions. He also introduces a 46 cents fiscal year 2008 EPS estimate, based upon estimates of 13% revenue growth and 17.6% operating margins.

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