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Technology Stocks : Corel Corp.
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To: Dr. J who wrote (452)6/2/1997 11:55:00 AM
From: A. Hayer   of 9798
 
>Corel has some upside, but it's not because it's going to grow its market share by 20 points.

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In a 5 Billion USD market, each of Microsoft's 85 points are worth about $50M. Each of Corel's points are probably worth $25M because of the 1996 pricing model. The new 1997 pricing model will probably value each Corel point around $33M.

With Corel at least holding existing market share, we should see 1997 productivity revenue increase by at least 32% (33/25) based on the new pricing model alone. Probably alot more since Q1-96 had no productivity revenues and Q1-97 did.

With each 1997 point being 18.5% (33/178M) of Corel's 1996 Productivity revenue, what happens if Corel increases market share by a few points...

Excluding Q1-96 and Q1-97,

<point increase> <Q2,Q3,Q4-97 productivity revenue> <YOR % increase>

<0> <235M> <32%>
<1> <268M> <51%>
<2> <301M> <69%>
<3> <334M> <88%>
.
.
<20> <895M> <403%>

Including Q1-97,

<point increase> <1997 productivity revenue> <YOR % increase>

<0> <289M> <62%>
<1> <322M> <81%>
<2> <355M> <99%>
<3> <388M> <118%>
.
.
<20> <949M> <433%>

From this analysis, I would say that Corel can really boost their productivity revenues with just a few points (20 would be nice) and that could also provide upside in addition to the fundamentals.

ah
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