Dr. J., My "bullish" attitude on COSFF comes mostly from past experience with other "high profile" companies which have been in Corel's position with respect to earnings, competition, negative press, low expectations and so on. It also comes from high expectations with Corel's product line, internal talent, and the prospect that "positive press" is being, and will be, generated as they continue to prove their tenacity and courage through improved products, better features, and reasonable pricing. I do believe that Corel management has the ability to learn from errors and make corrections. We've seen a fair bit of evidence of this already, and I'm sure there will be more to come. What are some of these ailing or otherwise discounted stocks with great rebounds:
1. Unisys - as low as $2 in 1992
2. Chrysler - $8 in 1992
3. Advance Micro $7 in 1992
4. 3Com - as low as $8 in 1992
5. IBM - as low as $40 in mid-1993 and now around $170. (A transition period for IBM.)
6. Intel, yes Intel. While it was in its legal battles with AMD from 1991 - 1993, the stock was as low as $25. Where is it now, after several splits, around $150.
As far as quantitative analysis is concerned, look back on the $100 in 1998 thread. There is an abundance of data and excellent analysis sprouting from Corel's annual report and Q1 financials. The "Corel" thread was only started in late April. There are some extraordinary investors following the thread. Just wait till we near Q2's earnings announcement and these talented people will be posting with vigor. (Positive and negative, there is a balance.) Right now you're seeing more commentary on the thread because there is simply a "lull" with the numbers until more information is released.
Personally, as a stock, COSFF excites me due to its market capitalization to revenue ratio of 1. Compare that to MSFT's 11 or 12. Also, the fact that a high profile, name brand company is almost at book value, the time to buy and hold is now. The odds of a comeback for Corel and its ability to gain marketshare in the corporate "suite" market are high. Most of the above mentioned companies were in a state of transition at the that time, hence market confidence was low. Large institutional investors, that can propel any stock to the clouds, shy away from companies in transition. Corel's acquisition of WordPerfect has been simply a state of transition for which large institutional investors have stayed away. With the dawning of Suite 8, the Java Suite, and the NC, Corel is showing vision and staying power necessary to build sales and will eventually catch the attention of fund managers.
You probably don't need the following analogy, but I'll use it here since you asked me "why?" Now think of a Pyramid. (The structure, not the scheme.) When a high profile stock is near book value, each share is like a stone of the foundation of the pyramid. As the period of transition moves toward stability with improving products, confidence grows. The smartest fund managers, say a Peter Lynch or Warren Buffet (why not use the big names) will identify pyramids in the foundation stage. They put their stones in first and wait for the investment "masses" to place the stones on the upper levels. Remember, to maximize profits, the foundation must be identified before the stock begins its daily or weekly rise. Those who tend to lose money, or earn less than expected in the stock have usually waited too long, and have had the dubious "honor" of placing the capstones on the Pyramid. Such is the present case with MSFT. Those buying in at $110 or more, are simply enjoying the honor of "capstone" investing. Even though MSFT has had impressive results with Office 97 so far, when the buying fever wears off, revenues and earnings are likely to disappoint. I believe as Corel's Suite 8 becomes known, that its market share will increase. There will be a shift, though small at first of capital from MSFT to Corel. And for $6 bucks a share, its a pretty "safe" bet. Thanks for your post. We would all do well to remember Jean-Sebastian Van Brugghe's motto, "invest wisely."
Up, Up, & Away!
Scott |
