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Technology Stocks : Micrografx(MGXI)
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To: CLYONS who wrote (415)4/30/1997 1:31:00 AM
From: John Binford, Jr.   of 543
 
I'm upset at management. For many many years the company has failed to grow earnings. If revenues grow, they just increase the costs to continually make no profit on average. Are they sacrificing short term profits to obtain long term profits? I don't think so. There is no evidence that a company that can't be sucessful in the short run will be successful in the long run. Granted the company says look at our balance sheet to see how well we have done. Well, most of this money was obtained from the IPO at $16/share many years ago (granted there has been a 3/2 split since then). So the company has basically kept the money under a mattress by delivering NO RETURN. All I see with the company is flat revenue growth and an increase in the number of shares outstanding. The purchase of Visual hasn't led to any additional increase in revenue, but it did manage to drain profits and add another million shares.

A friend of mine started his own company about 8 years ago developing scientific image processing software for the Mac and PC. He has revenues well over a million dollars a year and growing and high profit margins and resulting profits. How does he do it? By being very frugal and efficient. I would rather he run micrografx. The products would be just as good and the costs would be slashed. And the company would generate wealth for the owners.

To me the earnings report is very negative. If they can't make a profit after releasing so many new products then when will they? Look at Visio's recent press release for their earnings. Their gross profit margins are much higher than MGXI's and their cost structure allows them to spend twice as much on R&D as MGXI while still making a GOOD PROFIT.
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