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Technology Stocks : Corel Corp. -- Ignore unavailable to you. Want to Upgrade?

To: Eveline Bernard who wrote (3216)	10/24/1997 12:06:00 AM
From: Leo Mitkievicz	Respond to of 9798

Eveline Pete didn't write that. That was a little misunderstanding on my part which Pete did his best to straighten out. UNIX and LINUX both support (in a general sense) 64 bit processors. If I have it right now, the porting of applications is required for a program to run in native mode on each processor/OS combination. The Alpha is a capable risc processor which has not been all that well accepted within the mainstream of its target market. (high power requirements and heat buildup are part of the problem) Windows NT is making dents into the lower end traditional UNIX ONLY turf. The StrongArm is a wildcard, a joker. A 233mh risc chip with paltry power consumption, huge capabilities, and very low cost. Linux, too is a joker in the deck, and it comes, like UNIX, many flavors. (Which half-way explains the "who ported the Linux?" questions.) The StrongArm capabilities are wasted in set-top boxes, NCs and the like. Like using a Pentium 2 to control a stoplight. The information flow seems to be on hold for now. We might as well wait for the Gala and examine the reports. Leo

To: Eveline Bernard who wrote (3216)	10/24/1997 1:02:00 AM
From: Matt Burton	Read Replies (1) \| Respond to of 9798

Can somebody please calculate the effect of a possible deliverance of 100 000 VNC boxes to GM? Didn't you say it would take a year to turn these out at the current rate? How would the revenue for this deal (assuming and hoping there is one) be applied to earnings reports? Would it be completely posted to one quarter, either in the quarter the deal is made (this one) or when the deal is finalized (fourth quarter next year), or would the revenue be deferred over 4 quarters respective to the amount of computers GM receives in that quarter? msb

To: Eveline Bernard who wrote (3216)	10/27/1997 7:56:00 PM
From: Scott Volmar	Respond to of 9798

Eveline, Pricing of the NC boxes, the Videocam, and the software are not firmly published on the CCC website. A corporation can submit a request for pricing via e-mail, but it doesn't look like the exact pricing has been fully determined and probably won't be until an indication of actual "demand" appears. However, Corel has said in the past that they would like to sell the basic NC box for about $1,000. As I recall, Corel had asked somewhere around $800 to $1150 per seat for the videocam, interface card, and software. So using these assumptions a quick calculation is fairly simple. Maybe someone will post the actual proposed pricing to a customer such as GM, based on large quantities. 100,000 NC boxes $1000 ea. = $100 M Direct Costs - Approx. 70% = $ 70 M Gross Margin - Approx. 30% = $ 30 M I think CCC will be lucky to attain a 30% gross margin in a competitive hardware environment. Don't think for one minute that Sun and others are not working to "one up" Corel's NC. If the NC box and videocam are combined, the numbers grow. Assuming $2,250 per unit: 100,000 VNC's at $2,250 = $225 M Direct Cost - Approx. 70% = $157.5 M Gross Margin - Approx.30% = $67.5 M At this point it is unknown what CCC's overhead structure will be, so that will likely be the final variable to determine the potential profitability based on 100,000 units sold. Certainly these are my assumptions. I would appreciate any other opinions, or better yet, actual knowledge on the variables. Conversely, if Corel jumpstarted sales of the Suite 8 and sold 1,000,000 upgrades at an average price of $100 per unit in revenue, the following would result based on Q2's gross margin: 1,000,000 units @ $100 ea. = $100 M Direct Cost - Approx. 20% = $ 20 M Gross Margin - Approx. 80% = $ 80 M If the overhead and R & D spending were reduced, look at the potential. If I were Dr. Cowpland, I would pursue the VNC lightly and spend my resources and energies to FOCUS ON THE SUITE! Imagine 5 million upgrades of various versions of the Suite!!! Corel would definetly be headed . . . Up, Up, & Away! Scott