Corel is in a world of financial hurt..
[snip]
...they reportedly have only a few days of cash left. Well, I guess they sent the CFO out to make some sort of statement wherein he nervously repeated that had plenty of cash, or words to that effect. Who's lying: the press or Corel?
As a short, I don't have a problem with Corel folding up tomorrow. But I think it is probably premature to expect them to run out of cash "any day now". We do know that they had about $30M on 29 Feb-00, from their 10-Q filing. While the writing might be on the wall, a desperate company quite naturally devotes 100% of its talent towards survival, or at the very least delaying the inevitable.
They may become "effectively" broke, in that enough of their talent starts to get edgy and make preparations to jump ship if necessary -- this sort of thing can be a self fulfilling prophecy, to a certain extent. With an industrial company your suppliers get nervous enough to start wanting to do business with you on a COD basis -- however I don't think this applies to Corel, since most of their expenses are salaries and advertising/marketing.
They can probably raise ~$4M cash this quarter by selling some more Graphon shares (I'm assuming that one fourth of their 2.167M Graphon shares vest each quarter). This won't save the company, but it is a fair chunk of quick cash to help delay the inevitable.
Another way they might raise some quick cash is by repricing and/or calling any outstanding warrants or options (if applicable)
I suppose what I'm looking for is some help in speculating as to what the mode and timing of their demise might be. Anybody else think they'll fold sooner/later, and why?
- Daniel |
