Wave Systems Corp. says it will lead emerging Trusted Computing sector
Forgetting usernames and passwords for online banking, e-mail and other Internet services continues to be a headache for most computer users. During an afternoon presentation, Wave Systems Corp. (Nadsaq: WAVX) CEO Steven Sprague made the case that his company’s software will alleviate the headache of usernames without sacrificing security.
“We all know that PC security really is a mess,” Sprague told attendees of the Security Research Associates Annual Summer Growth Stock Conference in San Francisco.
Wave Systems makes software for the Trusted Computing standard, an emerging security standard that was recently mandated by Microsoft Corp. (Nasdaq: MSFT) to be part of its Vista operating system. Sprague compared Trusted Computing to the ubiquitous Ethernet networking standard.
“I come to this hotel and there’s a jack in the wall in the room – it’s exactly the same as the jack in the wall in Moscow,” he said. “Those kinds of PC industry standards have driven global adoption of technology. Trusted Computing is one of those standards.”
The Trusted Computing platform is currently supported on 50 million installed machines, he said, and should ship on over 100 million units in the next 12 months. Sprague said business computer networks need the platform for strong authentication, data protection, regulation compliance and network access control. The platform also reduces the costs of IT departments, who spend a great deal of time fixing user passwords, he said.
Sprague predicted that everyone will have computers that support Trusted Computing in four to five years.
“This train has left the station - the inevitability of Trusted platform modules on all computers is in the pipeline today,” Sprague said. “Our mission is to build the software tools and infrastructure so that PC manufacturers, enterprises and government can manage Trusted platforms and modules.”
Sprague conceded that the technology is only in its emerging stage, but that awareness is great.
“Has anyone turned this on yet? Is anybody using this?” he said. “The answer is not great yet, but the awareness is dramatically growing and we see customers like Microsoft who are making this part of their core products.”
The company’s revenue comes from the sale of hardware manufacturers who include Wave Systems’ software. Currently, Sprague said Wave Systems’ largest customer is Dell, while other key customers include Intel Corp. (Nasdaq: INTC), Seagate Technology (NYSE: STX) and Gateway Inc. (NYSE: GTW). He said the company is mentioned to anyone who is getting a sales presentation from Dell. In four to six weeks, the company will receive a royalty report from Dell, Sprague said.
The company is still waiting for the revenue side to engage, but is gobbling up market share in the emerging Trusted Computing sector, he said.
“The true core enterprise business is yet to start,” Sprague said. We need to close something in the order of 300,000 enterprise seats to start moving the company towards cash flow neutral and that’s completely practical off the volumes that we’re shipping on a bundled basis.”
On July 3, the Defense Department said all computers purchased by the department for corporate contractors must have the Trusted platform module.
“That’s a nice endorsement of the technology,” he said. “Now they have to turn it on and use it.”
Sprague said the Trusted Computing module is unique as a widely accepted standard in that venture capital hasn’t invested large amounts of money. However, he predicted this will change.
In early May, the company reported a loss of $5 million, or $0.12 per share, on $1.3 million in revenue. In the comparative period of 2006, the company announced a first-quarter loss of $4.9 million, or $0.15 per share, on revenue of $0.49 million.
Over the last 52 weeks, shares of the small-cap company have ranged between $1.50 and $3.85. In today’s trading, shares are down $0.01, or 0.49%, at $2.02.
