All recent criticisms of Del notwithstanding, there is something awfully attractive about Borland in the 3s. While the stock has been heavily diluted over the last couple of years, the company does have intrinsic value that is worthy of consideration.
With net assets of $150M and a current market cap of $222M, the market is assigning a value in the 70s to the current product line, name recognition (okay, well some people recognize Borland at least), product in development, and existing customer base. These items are worth more than $70M, even in a liquidation.
As a practical matter, there's not much downside risk here. This company has faced much tougher times in the past (have we forgotten that only a few quarters ago it was bleeding badly -- at least now, it is turning a profit). Now that it is making [a little] money, should it be bottomed out like this? I don't think so.
I think Del has made some bold, risky moves with the company and the VSGN deal was, in my mind, a real bungle (and may have been, even if had been at a reasonable price). But I haven't ruled out the possibility that all this stuff is going to work, but it is just taking longer than anticipated.
If they cease to abandon the small developers who have kept them alive, they may be able to make it yet. It seems to me the big mistake (besides VSGN) was to abandon the small, loyal customer base before acquiring credibility with larger developers. Now, even small developers are questionning the viability of the company. It appears the company recognizes the blunder and is attempting to regain its loyal customers, but it may be too little too late.
Anyway, in the 3s, there is so little to lose. Come Monday, I'm buying. |
