Rajeev,
Let me quote you OPEN's own quarterly statement with my own interpretation.
I'm less than optimistic about OPEN...
"BOSTON, Mass., April 30, 1996 -- Open Environment Corporation (NASDAQ:OPEN)
a provider of highly-scalable, multi-tiered client/server software technology
today reported revenues of $4,279,000 for the first quarter ended March 31,
1996 compared with revenues of $6,192,000 for the first quarter of 1995, a
decrease of 31%. The latest results include $1,060,000 in revenue from a single
$2,500,000 order from a large distributor. The Company plans to recognize revenue
on the remaining balance upon sell-through. The net loss for the first
quarter of 1996 amounted to $4,048,000 or $0.54 per share compared with net earnings
of $174,000 or $0.03 per share for the comparable period in 1995. This announcement
is a follow-up to the Company's April 8, 1996 release which stated the first quarter
of 1996 revenues would be significantly below analysts' expectations."
My Interpretation: Basically revenues dropped in the last QTR by 31% to $4M of which
one order represented 25% of the entire quarterly revenue !!! They'll have to generate
$26M in the next 3 QTRs in order to reach $30M in revenues for the year.
Impossible, to say the least...
"According to acting President Adam Honig, "The company has realigned resources to more
effectively capitalize on our significant market opportunity. Our key initiatives include
the immediate elimination of unprofitable lines of business, close control of operating
expenses, and the realignment of the company's management structure, including the elimination
of autonomous operating divisions and the consolidation of management functions in
our Boston headquarters."
My Interpretation:You might wonder how many "unprofitable lines" can be eliminated
"immediately" at a company which has only $4M in quarterly revenues ?? It seems to
me that by eliminating those lines, revenues will have to drop ...
Don't forget some mid-size restaurants have more than $4M in quarterly revenues...
"Honig concluded, "As always, we remain committed to maximizing shareholder value, and
towards that end, on March 6, 1996, the Company engaged Donaldson, Lufkin & Jenrette to
analyze various strategic alternatives."
My Interpretation: This is the clincher... since OPEN's management figured out that they cannot
possibly make money as a company, let's try to sell it. BORL seems to be 'naive' enough to walk
into this deal and willing to dilute BORL which might worth something, for OPEN which trades
at $ 4 5/8 when the BORL deal guarantees a $ 6 1/2/share cash. Even the market has a hard time
to believe how sweet this deal is for OPEN shareholders.
I'm not against the merger, I'm against the dilution of BORL and paying more for OPEN than
the original 0.51 BORL for each OPEN |
