Hi Doug...About Return on the 1.1B
>>I seem to remember that they were getting 7%.<<
The quarterly results show that they make between 13M to 15M quarterly which is 5% to 6%.
Share Buyback
During FY-96, they bought 33M shares for about 450M (13 5/8 per share). This is about 3 points higher than the current stock price. IMO, the 1.1B cash is providing support for the stock price. Clearly, they have shown that they are not able to grow the business after focusing on their core strength. The main issue right now is not the number of shares, it is growth.
>>4. Seems to me that the company is, albeit slowly getting better all the time, a serious buyback would be a clear and convincing argument that they all believe in the future of the company.<<
I don't see them getting better slowly, it seems to me that they are totally stagnate. How do you explain that their revenues over the last 3 quarters varied between 365M to 384M?. They released upgrades of their main 3 products last fall and Q1 results showed clearly that they couldn't increase their sales. Don't buy into what Marengi and Troop are saying about turnaround, it is not happening. What is happening is that they don't have a clue on how to turn it around, pure and simple. Don't forget that they decided to get rid of Unix and WP in the Fall of 95. Now, 5 quarters later, there is no progress. Their problems are deeper than what you think. If they were simple, they would have solved them by now.
Before the appointment of Schmidt, their chances of turning the compay around were between 25% and 30%. Now, it increased to 50% to 60%. However, it will take 2 to 3 quarters from Q2-97 to start showing progress. In the mean time, they are better off by keeping their cash in the bank.
Regards
Salah |
