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Technology Stocks : Corel Corp.
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To: Alomex who wrote (4973)3/31/1998 10:28:00 PM
From: Tommy D  Read Replies (3) of 9798
 
I sold my stock some time ago but came back to the thread today when I saw the buyback announcement. I see there was no reaction to the buyback in the market and I was curious as to the comments on the thread. It is easy to dismiss the action as one taken by a "delusional CEO" but life isn't that simple. The buyback would be a decision made by the Board of Directors, not the CEO and I would suspect, also with the support of the management. To make such a move after 5 quarters of losses is quite remarkable as if the financial position is as bad as some have previously predicted on this thread, there is potential personal liability to the directors. This occurs when a company repurchases shares if it is insolvent. Directors of a public company have no reason to take chances in thei area and have a further fiduciary obligation to the shareholders to manage the company in a prudent fashion (I know to sugest the company has been managed prudently will send some people off the scale but I am just stating the law). In these circumstances, it tends to indicate that the directors/management are optimistic about the companies future if in fact they proceed with the buyback.

I emphasize that I do not own the stock but may consider repurchasing again. Other that being an announcement that the company has no intent on acting on, is there some negative aspect to the announcement that I am missing. Please spare me the "CEO is a jerk routine" because I don't think it applies here for the above reasons.

Regards TommyD
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