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Technology Stocks : Corel Corp.
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To: Leo Mitkievicz who wrote (3832)12/11/1997 2:01:00 PM
From: A. Hayer  Read Replies (2) of 9798
 
"Most likely they were talking Canadian, or mixing their currencies"

Good observation.

The 5.4 million buyback is equal to 3.8 million US.

3.8 million divided by 17% = 22.4 million, which is what they had at the end of Q3.

I still think the buyback has more to it than it appears. Given the choice what would Cowpland do with 3.8 million.

Would he:

(a) Spend on R&D
(b) Reduce long-term debt
(c) Allocate to European and US corporate sales efforts
(d) Reduce cash burn-rate to reflect a better Q4 cash wise
(e) Buyback stock

I would of guessed (c).

There is no way the company would spend millions buying back their stock if they thought 1998 was going to be bleak. There are better uses for the cash if 1998 was shaping up to be a dismal year.

IMO, the first step to profitability was taken when the company announced that the advertising budget would be slashed to 10M per quarter starting in Q1-98. If that takes them close to break even, then the next step is to slash R&D but enough to keep nurturing the core products.

Corel is obviously banking on enterprise products to boost the top line. 1998 will tell if that strategy works. In the meantime Corel needs to focus on the bottom line. I beleive O'Reilly was brought on board to serve that purpose.

I sense changes not only in management but in the Board of Directors as well. In fact there has already been changes in the BOD. Go check out www.corel.com for the changes. The most positive change in management has to be O'Reilly IMO. The fact that he goes on record and says that the days of Cowpland running the company on his own are over is a good sign.

Even better would be if Corel hired a new CTO, and a new President, with Cowpland being just the CEO. This would give management more credibility than it has now.

Cowpland has already said they are looking for a CTO.

ah
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