Dear Kenneth:
CTXS has a web site that lists all the projects they are currently working on. In addition to involvement with Microsoft, they are also heavily involved with Sun Computers, I believe. (I haven't looked into that recently, but I believe that is still the case.) The whole problem Microsoft has with them, is that they are unwilling to give them exclusive licensing rights. I believe that is more the issue than anything else, but that is my instinct only. They have many other projects going on in addition to the project they are trying to sell to Microsoft, but the contract they have with MS comprises the largest part of their revenues. It is not something they would like to lose, but if they did end up losing it...they would not fold.
I do not believe that MS would be able to takeover CTXS. They are in excellent shape financially. They also have only 26 million shares outstanding...pretty low for a blue chip stock. MSFT has 1,203.16 MILLION shares outstanding. They also have tremendous capital and return on equity for a smaller company such as this. Their capital is in the Billions .....of course MSFT's is in the trillions....but they have nearly 47 times the number of shares outstanding. I think for a company their size, with the number of shares outstanding, the capital, return on equity, low debt-to-equity ratio....they are in not ripe for a hostile takeover. CTXS is in excellent financial position. Bill Gates was trying to flex his muscles and prove that he could mess with their stock price quite easily. Make no mistake, CTXS' financial success of the last year is due in a very large part to their involvement with MSFT. Would MSFT like to absorb them? Yes I believe that CTXS' technology is crucial to the success of the Windows NT operating system. Will this goal be easily achieved. I do not think so. Based on the financial stability of CTXS, it would cost msft a lot to try and buy them out or get them to consider a merger. I think that it is too late in the game for that. However, Bill Gates would like everyone to believe that he could easily buy them out. He is trying to get his own way (exclusive licensing rights) and is using the media to his advantage to achieve his goals. CTXS, like MSFT, has a huge float...23.4 million shares. MSFT has 733.9 million in the float. Unfortunately, bad rumors do work to CTXS' disadvantage and their stockholders tend to unload their stock at the sign of bad news.
It is my strong feeling that CTXS is much too large and financially stable to be taken over or bought out. However, stranger things have happened in the turbulent world of stocks recently.
BTW...what do you think of the BRE-X incident? Think that stock is going to come back to anything? A lot of evidence does point to corrupt dealings, but I do not believe they are through yet. I also think a lot of what has happened has been blown out of proportion. After the evidence of last week, I believe they did need a restructuring of upper management (many of them are probably guilty) but I don't think all of them are. They also have other things in the works. Rumor has it that they have delisted themselves from all the stock exchanges they were on and have listed themselves on the Canadian OTC exchange. Rumor also has it that they should be trading next week. Like CTXS was in late February, I believe that BRE is severely undervalued right now and will bounce back at least somewhat in price. We'll have to wait and see I guess. I bought a few thousand shares for 6.5 cents just on the possibility that they might bounce back some. Stranger things have been known to have happened. I find it hard to believe that a company that is still worth millions and whose stock has plummeted from $34 to 5 cents in about 2 months isn't going to rebound at least a little. However everyone in the media is predicting otherwise. I'm just glad I didn't get in sooner.....many investors lost hundreds of thousands of dollars. I feel sorry for them.
Hope all this helps.
Cordially,
Kerry S. Nelson |
