<<< "can anyone tell me how the move to U.S. GAAP will affect their earnings next quarter. Are they going to take a one time cfharge for the purchase of WordPerfect and get it over with so that each successive quarter will not have the depreciation of the acquisition affecting the bottom line." >>>
In one word "yes".
Take a look at this article:
ottawacitizen.com
From the article:
Corel is also working on a way to make the company a more attractive investment by changing its accounting rules.
Mr. Cowpland said Corel is taking a $10-million hit every quarter to write down last year's purchase of WordPerfect, which is what Canadian accounting regulations require. But U.S. accounting rules allow companies to write off an acquisition all at once.
If the Toronto Stock Exchange allows Corel to change to U.S. accounting practices -- several other local companies have done so, including JetForm Corp. and Cognos Inc. -- Mr. Cowpland said the company will write off a whopping $150 million in one quarter.
But every other quarter after that will look great.
"Last quarter we had a $1-million profit," he told reporters. "Without the depreciation cost (of the WordPerfect deal), we would have had a $10 or $11 million profit."
Jean Orr, a St. Louis-based financial analyst who considers herself a "Corel believer," said the accounting changes are just optics, but they may very well have a positive effect on the stock.
"In a way it's visual," she said.
"But investors focus on reported results. After the (accounting) changes, those results would be higher each quarter."
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The one thing I can't figure out is why didn't Corel switch to US GAAP three quarters or four quarters ago. The aquisition related earnings-hangover could have been elimimated last year.
Why wait all this time and effectively kill the stock. I get this really bad feeling that Corel waited until at least the AGM so that the employee's and management could get their overvalued options re-priced at a really low level. And it looks like they will have the chance to have their options re-priced in the mid to high sevens this friday.
So where do we go from here...
Up I hope.
Could be sooner than later if Sun's Project 3000 chooses Corel over IBM or Oracle.
Also, Corel is planning to ship 250,000 copies of WP8 in May. The demand may be higher now that WP8 - beta 2 is getting really good reviews along with the excellent showing at RetailVision.
If they receive US$89/unit from distributers such as Ingram and Merisel, WP8 could bring in at least US$22M in Q2-97.
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