To all.
I believe investors/analysts of Corel are losing sight and getting scared to death of Microsoft.
As an investor what scares you more:
Being an investor in Corel whose market cap is US$420 million with possible earnings of US$4 to 10 million this quarter.
or,
being an investor in Microsoft whose market cap exceeds US$130 Billion , with earnings over 1 Billion in their last quarter.
At first glance, if I were investing new dollars, I would make my donation to Microsoft. The Microsoft camp is big and the stock is in favour by everyone. Corel is completely out-of-favour. But when I take a hard look, and consider not only the upside, but the downside as well, I opt for Corel.
I think over the long term, Microsoft has equal potential for upside as it does for downside. Continuity of exceeding analysts estimates will continue to drive the price up, and who knows how long that will last. Most people think it will be forever (do trees grow to the sky??). But envision what will happen, when some turn of events (probably Java) take away the shine from the proprietary Windows O/S. The quarter that occurs will show the downside potential of a $130 Billion stock.
It seems to me that industry is pointing towards open-standards. If you share that view, Java makes a lot of sense, and you are probably already supporting Java. Intel's recent announcement that Java performs fastest on Intel Architecture (better than Windows) endorses Java and indicates that Intel will not be left behind in the NC wave (by the way, Intel is using Corel Office for Java for benchmark speed tests). Intel obviously wants an Intel chip in every NC. They already have Oracle on their side. So if Corel is placing a significant bet on Java, they are in good company. It's not so much Corel up against Microsoft, but SUN/Netscape/IBM/Oracle/Novell/Corel up against Microsoft. So when Cowpland says that without Java, Corel is in trouble, he is right. Only Java can stop Microsoft domination.
I really believe over the next few years Java will either exterminate Windows or it will be torn to pieces like OS/2. I would sway towards Java domination, much like Windows stamped out DOS. If the Java O/S is embraced by corporations, momentum will build upon itself, and I think this will spell trouble for Windows and Microsoft and create large profits for companies with products supporting Java.
People on this thread talk about the slide in Corel shares, poor performance, etc. The steady decline in price has been happening for a while ever since Corel boosted R&D and advertising in 1995. The last time Corel recorded a decent quarter was Q395 when net income was 22.9% of sales.
Since 1995, Corel has been suffering growing pains. If Corel now swithces to maintenance mode (as suggested), the rewards of heavy R&D and advertising will be reaped.
It's been a long time since Corel has had a decent quarter. I am in the belief that one strong quarter will cause the stock price to do a u-turn. I also believe that if Corel can maintain expenses at US$65 million this quarter, we will see a strong quarter when results are released in June.
ah |
