And, not only that, I don't think it's off-topic to put salient information about Novell and how they handle their business also.
Salah, I still think there's gotta be some impact on the 14.7% Novell owns in Corel in future Q's. How can it not? I know you answered me on that one but, I guess I just don't get it. Anyway, Paul -- check out
this one on Corel - Novell STILL OWNS ~14% (pretty soon it's gonna be a penny stock -- sheesh whatta ROI eh?). And check out our old buddy MARENGI and how he high-tailed it outta their neck of the woods (man, what a rats nest ....).
Oh yeah, and they're using CANADIAN $ in this article not US. It ain't THAT good <g>.
Corel has about US$2.35 a share in revenue, which, when applied with a reasonable share price multiple of 0.3, gives it a share price of US71›. Throw in its US40› a share in cash, and the stock is worth at least US$1.11, or $1.60. The stock (cos/tse) closed at $2.17 in Toronto Friday, down 37›, and (cosff/nasdaq) at US$1 1/2 in New York, down 1/4.
Personally, I think Corel is gonna go under a buck, and Novell is gonna lose a ton more on this investment. Salah, tell me again how this was already accounted for, and won't show up in upcoming Q's for Novell? I still don't get it. It's gotta be bad for Novell.
<<<<<<<<<<
In the hot seat
Andrew McIntosh
The Ottawa Citizen
Cleaning up Corel's
mounting losses and
damaged credibility
will be a messy job. Is
Michael Cowpland the
one to do it? Andrew
McIntosh reports.
As the senior management and board of
directors of Corel Corp. struggle to
return the Ottawa company to
profitability in 1998 after a disastrous
1997, one question looms larger than all
others for the software giant:
Should they be doing anything about
Michael Cowpland?
Nobody has yet publicly called for Mr.
Cowpland to step down as Corel's chief
executive, a move that would allow him
to remain company chairman.
He founded Corel in 1985 and still owns
10 per cent of the company.
Investment analysts say it is not for them to make such calls. Rather, it's a
matter for the company's board and its big shareholders.
Analysts and Corel's former chief financial officer, Chuck Norris, have
publicly acknowledged that Corel has big credibility problems. But they stop
there.
"I'm not prepared to say, given recent problems, that Mr. Cowpland should
go. I don't necessarily believe that's the solution," said Michel De Lavergne, a
software industry analyst at Dlouhy Investments.
"At this point, Corel's problems are deeper than that," he added.
"Their products aren't selling well, and that's not necessarily Cowpland's fault.
Their distribution isn't working, and the company doesn't seem to know what
they'll be selling in six months."
But investment analysts have been privately saying for months that the offices
of chairman and chief executive at Corel should be separated and Mr.
Cowpland should make way for a new chief executive.
They cite Corel's unfocused business strategy, the stuffing of its channels with
$100 million in unsold product and Mr. Cowpland's overly optimistic and
unrealistic statements about Corel's future financial performance.
Mr. Cowpland's sale of $20.5 million in Corel stock in August -- days after
two brokerage firms, RBC Dominion and Dlouhy Investments, met its
managers, then recommended investors buy Corel -- simply made things
worse.
The stock sale came a month before Corel announced a surprise
$31.5-million loss and and a projected loss of $15 million to $20 million for
its fourth quarter, a projection that has ballooned to $95 million.
Mr. Cowpland, Corel's top executive, said he knew knowing nothing about
the coming losses and used the money from the stock sale to pay debts.
Institutional investors and Corel's largest shareholder, Novell Inc.,
subsequently sold or reduced their Corel holdings, sending Corel shares to
their lowest level ever. (Novell still owns 14.7 per cent of Corel.)
They closed yesterday down 37 cents at $2.17, recovering somewhat from a
new all-time low of $2.05 in early-morning trading.
Yesterday, Toronto Star technology columnist Richard Morochove called
Mr. Cowpland's $185-million U.S. purchase of WordPerfect technology in
1996 "among the greatest blunders in the history of Canada's technology
business."
"The New Year must bring a new approach to Corel's management.
Otherwise, the company is ripe for shareholder's revolt," Mr. Morochove
wrote.
Martin Vallee, a technology analyst at Tasse and Associates, said that while
Corel might need new executive blood, what analysts really want to see are
better and more accurate sales numbers from Corel and more money in its
coffers.
"We have to have confidence in the numbers he gives us," Mr. Vallee said.
"Mr. Cowpland talked a lot, too much, about the potential of Java
(programming language) and how it was going to boost revenues. Many
people believed him, then he pulled back from Java and it was too late.
"He can't keep promising the heaven and the Earth and then not deliver."
Over the past six months, references to "credibility problems" of Corel and
Mr. Cowpland have increased in national business newspapers.
Mr. Cowpland told reporters on Thursday that he's not going anywhere, his
board supports him, and that Corel, with only 1,500 employees, doesn't need
a chief operating officer to help him with day-to-day management
responsibilities.
During this time, Corel's board has been silent and has had its own
misfortunes. One director, Toronto hightech financier Donald "Ben" Webster,
died of cancer a week ago and has yet to be replaced. Mr. Webster had
been ill for the past two years.
Another Corel director, Novell nominee Joe Marengi, quit this summer after
leaving Novell. He was not replaced. The software company did recently
appoint Jean-Louis Mallouin, the dean of the business school at the University
of Ottawa, to fill a vacancy.
As Corel has grappled with its own woes over how it reported sales figures in
the past -- until recently, it counted as sales $100 million in product shipped
to distributors, instead of actual product sold in stores -- another software
company 5,500 km away in Santa Clara, California, experienced similar
troubles.
The company is called S3 Inc., a major six-year-old multimedia-software
player. Its board has been a lot more active and visible than Corel's board.
How S3 and its board of directors handled its financial woes and what has
happened to S3 as a result of its revenue reporting anomalies stands in sharp
contrast to what has happened with Corel.
On Nov. 3, S3 stunned investors on the Nasdaq by announcing it had
discovered errors in the timing of how it recognized its sales revenue.
It said its shipments to distributors in past quarters were recognized as
revenues, even though the products were not yet sold, a problem the
company said involved between $40 million and $70 million worth of shipped
products.
As a result, S3 chief executive Gary Johnson said, the company would restate
its revenues downward by that amount for an undisclosed number of quarters.
A new chief financial officer was appointed and S3 disclosed that the audit
committee of S3's board of directors (all its members are not employed by
S3) was reviewing the irregularities.
After hitting a high of $23 each in October 1996, S3 shares crashed to $5
each following the announcement.
In the year before it announced the irregularities, S3 officers sold more than
400,000 shares and generated more than $7.5 million in proceeds.
Since the Nov. 3 revelation, S3 has been hit with three class-action lawsuits
on behalf of shareholders who lost money on the company's shares.
The lawsuits, including one filed Thursday as Corel announced its $95 million
losses for the fourth quarter, accuse S3 of issuing misleading and grossly
inflated financial results and taking part in insider trading offences.
S3 has denied all the allegations.
Late yesterday, S3 announced its chief executive, Mr. Johnson, and its
co-founder and chairman, Diosdado Banatao, were both stepping down.
Mr. Johnson will remain as vice-chairman of the board and Mr. Banatao will
remain as a member of the company's board. The company's new chief
executive is Terry Holdt, a former chief executive who had retired from S3 in
1996.
In a statement, Mr. Banatao said he quit because he wanted to devote more
time to his increasing commitments as a seed investor and director of high tech
start ups in the Silicon Valley region.
<<<<<<<<<<< |
