Leo, remember the old adage, "You can't spend more than you make . . . for very long? Corel has been doing this for 3 years now, and it looks like the piper is about to be paid. Without "chainsaw" sized cuts, COS/FF is about to hit the ground hard.
With A/R still at 83% of quarterly revenue, today's full report is quite sobering. A/R should be at about $13-18M. I'm not enamored with $14M in inventory either.
With Adobe and Microsoft challenging Corel for a big chunk of the graphics market, and without any real impetus with Suite sales, the remainder of this year looks bleak. My guess is that the revenue shortfall is likely to increase. Without a healthy additional dose of those cuts you so vocally recommended last year, things are now even tougher.
What does Management see in projecting sales to surge to $55M in one quarter just to break even? At least you have to say that Management implies they believe there will be this much revenue, at least to be "prudent" by matching expenditures. In light of Mr. O'Reilly's comments about restructuring, they must be projecting sales to be greater than $55M. Any corresponding increase in A/R will just be an indication of filling the channels with new releases and will not be an indication of real sales. Its a discouraging time indeed.
Cheers. :(
Scott |
