Corel--$100 in 1998 Message Board

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Technology Stocks : Corel--$100 in 1998

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To: Kari who wrote (1827)	3/17/1997 8:55:00 PM
From: zigler	of 2329

I have been following this thread for a month or so now and have found the discussions quite informative. However, I believe any Corel/Newbridge association to develop video conferencing equipment will do little or nothing for the stock. Corel will be judged on their ability to market software in a profitable fashion. Investors like companies that are focused on what they do best and in Corel's case, that is software not hardware. Good software will make you more $$$ than trying to sell commodity type hardware (ie. Apple vs Microsoft). A simple analysis: Based on 4th quarter 1996 results, Corel needs to sell $115 million to break even based on current expenses for administration, selling, research etc. If Corel by year end can increase their quarterly sales to $150 million (reasonable!) and maintain their expenses at 4th quarter levels, they would generate a profit of around $35 million x 70% (gross margin)x 65% (after tax) = $16 million or $0.23 U.S. per share base on 70 million fully diluted. This would give the stock a potential price of $14 US based on 15x yearly earnings (again reasonable!) or more than double the present value. Corel can be quite profitable without making Bill Gates loose any sleep at night. Mr. Gates may infact welcome a strong(er) competitor to keep US anti-trust people of his back (provided they do not take too much of his business). The above simple analysis or PE ratio could easily be exceeded if Corel starts to run on all cylinders and any potential gains far exceeds the potential downside to this stock based on current prices. Zigler

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