Management
A lot of the comments about Wilczak seem to be based on nebulous or personal factors. Judging by his track record, he's done a fine job of starting a software company from scratch, creating the plug-ins business, transitioning into innovative software applications, braving the tough waters of consumer applications, managing several acquisitions (at least one of which--Fractal--was unarguable gotten at a very cheap price), and finally articulating a coherent mission of pursuing visual computing.
Diversification
Even a much larger company such as Adobe has wrestled with the difficulty of pursuing consumer and professional product lines simultaneously. I hope MCRE realizes that its bread and butter is the professional applications.
OEM Deals
Big companies like to deal with other big companies. Adobe was there first with PhotoDeluxe. Microsoft will get its share. MCRE's Soap just wasn't good enough to be the buy guys. But MCRE should still be a player in the scanner and photo imaging consumer software OEM business--and if they do fantastic technology they can certainly gain market share. But Kai et al need to be careful not to be so taken with the glitz of his own interfaces that they forget about basic usability and other mortal concerns.
What Are the Current Business Circumstances?
Seems that many companies really struggle to graduate past that $100 million mark. Look at Macromedia. Just as they started to break into new Internet products, the "cash cows" (Director and FreeHand) began showing their age and revenues caved in from behind. You have to maintain your aging products while rolling out enough new ones to grow, and that is extremely difficult. Right now MCRE is shedding its first cohort of obsolete products, as KPT no longer generates much revenue. But new technology such as a freestanding "KPT Unplugged" or the 3D scanner or whatever takes time. And when market conditions are choppy, as they are now (look at Adobe in Q4), it's quite possible to experience a revenue shortfall even if you're actually doing everything is right. "Growth stock" investors who just look at numbers can be expected to presume the worst and flee any revenue shortfall, but I'm assuming that most investors in MCRE have done their research on the company.
Is This Company a Good Investment?
Cheap RAM, faster computers, digital cameras, and ultra-cheap color printers all argue for a growing market for graphics software. Yet how many viable companies are there with enough products to give them staying power? Adobe Adobe Adobe. There is definitely room for more players, and of all the contenders for #2 in the graphics software business, who is better than MCRE? The market is too big and diverse to be owned by just Adobe. I take it as a given that managing the scaling up a software business is prone to be a messy process, and I fail to see the damning flaws that others see. The professional products are great--the consumer stuff needs to be equally as great. |
