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Technology Stocks : MITEL (MLT) -- Ignore unavailable to you. Want to Upgrade?

To: Srexley who wrote (1536)	8/16/2000 2:46:40 PM
From: Srexley	Read Replies (1) \| Respond to of 1730

Here's an interesting article from Ziff Davis about the founder of Mitel. The article is about him leaving Corel, but actually has some decent information on the history of Mitel. August 16, 2000 2:31pm 2HRS2GO: Companies have survived Cowpland before By Sergio G. Non 22GO ZDII Fans of Corel, take heart: there is a precedent for post-Cowpland survival. Corel (Nasdaq: CORL) made Wall Street headlines for all the wrong reasons over the last several months, so the resignation of founder Michael Cowpland probably doesn't surprise anyone. Regular readers of ZDII's commentary know he dosn't have any fans here. In fact, those readers probably have noticed that the media attention devoted to yesterday's announcement underscores the degree to which people are captivated by Cowpland's theatrics. We're talking about a company that was never a truly significant player in the software industry, except perhaps as a comical foil for Microsoft (Nasdaq: MSFT). Sound off here!! Post your comment Latest News on CORL Corel faces challenges as Cowpland leaves, analysts... Corel Teams with Sair Linux for Linux and GNU Training: Customized training solution modeled after S... Corel stock gains on Cowpland's departure... CORL: News Profile Chart Estimates Oh, Corel's legion of fans (or, more accurately, Microsoft haters) will tell you Corel is a leader in value retail sales of office applications. And they'll tell you that the company's well-reviewed Linux products are destined for greatness. But in terms of market share and financial performance -- the metrics that truly measure a company's viability -- Corel has always been a bit player. Yet ZDNet has a quartet (now a quintet, with this column) of articles on Corel. CNet displays Corel as a featured story. Even a fuddy-duddy news organization like The Wall Street Journal put Corel as the top story in the technology section of WSJ.com. Shares of Corel gained more than 8 percent today on the news of Cowpland's departure as CEO and chairman, but I'd be lying if I predicted a bright future for Corel with a new executive. I think Corel as an independent company is dead; it's simply in a bad field, with one foot entrenched in a failed war against Bill Gates and the other planted in a market whose core audience believes in free software. Fortunately for Corel's advocates, I've been wrong many times before. It comes with the territory: the safest path to correctness is following the ticker, but that makes for uninteresting writing. There's little point in reaffirming what everyone already believes. And if you want to find reasons to disagree with me, you might find some faint hope in history, because the first Cowpland-founded company to reach a state of near-oblivion managed to revive itself. Followers of the Canadian technology scene know about Mitel (NYSE: MLT), a vendor of equipment and components for communications systems. Cowpland and Terry Matthews founded Mitel in the early 1970s, though you'd never know it from Mitel's own website: a search for "Cowpland" on www.mitel.com turned up zero documents. Matthews and Cowpland created Mitel as a specialist in private branch exchanges, which let companies build internal phone networks. Mitel began NYSE trading in January 1982 at a price in the low 20s. Within a year, the stock climbed as high as 30 and change and the company was worth more than $1 billion -- an impressive feat back then. You can guess the rest of the story: Mitel couldn't handle its growth and the stock gradually slid into the single digits by the mid-1980s, when Cowpland left to create Corel. By late 1991, Mitel shares weren't even worth a dollar and people were wondering how this PBX stalwart would survive. The company started by tightening financial leaks in the current operation. Gross margin for Mitel rose to 50 percent in 1997 from 46 percent in 1993. Net income more than tripled over the same period. Since 1998, Mitel's efficiency figures have fallen a bit. But they've dipped for a good reason, as Mitel moved away from those analog PBX systems into growing fields. Mitel now manufactures networking components and integrated circuits; Mitel Semiconductor generated 56 percent of Mitel's overall revenue, not to mention all of the company's net income. Mitel Communications -- the systems division -- is obviously the laggard, though it's trying to move into the buzzword-infested field of convergence, with data and voice-over-IP. Plenty of people, including me, have criticized Corel's own fascination with buzzwords in the software industry. But Mitel has found something and is sticking to it, as opposed to jumping from one model to another, as Corel has done. More important, Mitel has remained profitable while expanding revenue at a consistent rate. Make no mistake -- Mitel is not some shining paragon of a technology corporation. It's not a leader in any of its growth industries. And the company's stock price was inflated not so long ago because of overall market momentum. But at least Mitel isn't the dog it was a decade ago. The company survived its founders. There aren't that many parallels between Mitel and Corel. For one thing, Mitel happens to play in the communications industry, an area with explosive growth and traditionally huge contracts. Corel, on the other hand, has always been a player in lower-end software. To vault into the loftier realms of software, Corel would have to make a far larger transition than Mitel required. Still, it can be done, and a new Corel might yet prove me wrong. If nothing else, there are certainly plenty of precedents for that one. 22GO