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Technology Stocks : Corel Corp.
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To: A. Hayer who wrote (331)5/29/1997 4:53:00 PM
From: Dr. J   of 9798
 
Re cap-ex: IR confirmed that $5m in Q1 was for ongoing equipment upgrade etc. (in line with depreciation). Rest was for software licensing. No guidance on the future (but expected there to be continuing "special" licensing needs). At the low end ($5m/quarter) this would lead to $10 suggested price; at the high end ($12m/quarter as you suggest) to around $5 ==> somewhat undervalued.

On a PE basis, if I back out the license amortization from COGS (also base it on 30% going forward), I get numbers much more in line with other s/w companies, an OPM of 15% and estimated EPS of 48c/share.
At a PE of 15-18 this suggests a fair price of $7.50-$9.

Of course, with some momentum going things could go much better than this...
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