This post says it all
canoe.com
Lets analyze what is being said:
1) "We actually made the quarter in terms of sales and shipping," Cowpland said. "But we thought this was a good idea to clear the decks."
1) The quarter from an operations standpoint was profitable
2) "Cowpland said the company will primarily report sales to end users, instead of sales into the channels, He said Corel's new senior vice-president of sales Don Sylvester has changed the commission
structure so that sales people will get paid only on products bought by customers, not those being held by distributors. Sylvester came to Corel from Dell Computer where he built a successful Canadian direct sales operation from scratch."
2) We complained about "stuffing the channels" and discussed the risks involved in this accounting practise. Now that the practise is being changed we all run scared like a bunch pigs going to slaughter
3) "Cowpland said part of the writedown comes from swapping updated software with product in the channels. For instance, the early release of Corel WordPerfect Suite 8 didn't include Netscape's latest Web browser offering called Communicator. While a certificate was included for a free upgrade, once boxes started to ship with the complete offering, the earlier versions gathered dust."
3) Obviously a write-off of inventory and a charge back to sales.
Remember all of this goes back to the 2nd Quarter, not the 3rd Quarter operations. With all of the Expenditures on R&D and A&P Expensed in the 2nd and 3rd Quarter to "get this sucker moving" and the change in accounting methods, The debit side of the P&L in the future will look good. With the sales in the 3rd Quarter not being deceived (stuffing the channels), The credit side of the P&L will look good. I still stand behind my view that a really good quarter will be estimated by Christmas.
Now if you guys, Sell out to the potential future of this company, you are only going against the basic principle of investment.
Cowpland doing anything else but what he did would have been worse for the stock. Get the shock out now and 4th Quarter will be the best.
The Good Doctor did us a big favour by changing the accounting methods to a more honest one (remember we bitched) and dropping the price of the stock to a real buying opportunity. Wait till Christmas, because I know I will link back to this post with a BIG FAT "I TOLD YOU SO".
JMHO |
