Corel - Inprise/Borland Merger Off

hwestiii was the first to e-mail with the word that the oft-troubled merger between Corel and Inprise/Borland has been called off. The press release has made its way onto Yahoo! so far, with the given reason being the decline of Corel's stock price making the deal impossible to close.

Comments

Reality check on Corel's value

[dublin]

Discalaimer: I own some Corel stock (which I could sell today and still make a decent profit...)

There's a lot of Corel bashing going on here. Some of it is deserved (the company is no shining beacon of management success), but Corel stacks up well against many of the current darlings of the industry. This is not a cheerleading attempt for CORL, but an attempt to point out how badly values are out of line with fundamentals across the software industry right now.

(Further, it surprises me that Corel is so villified here on /. - they are the primary commercial proponent of what is arguably the most "pure" Linux flavor - Debian.)

Let's take a look at Corel (CORL) relative to some of the more favored stocks in the Linux space, say Red Hat (RHAT), VA Linux Systems (LNUX), and Caldera (CALD):

First, a very important distinction: although Corel has cash problems, the company *is* making money, unlike any of the others above. This means it actually has a P/E ratio (curently 17.44 as I write this), unlike the others. That's beacuse CORL actually has some earnings per share:

CORL: +0.31
RHAT: -0.10
CALD: -0.79
LNUX: -1.68(!)

This is called fundamental value, and is the main reason that even if Corel gets strapped for cash ( as is becoming increasingly likely) that someone is likely to step in and buy them out, simply because they are a very good deal.

Now for a look at market cap:

CALD: 382M
CORL: 386M
LNUX: 2064M
RHAT: 3099M

Notice that Caldera has nearly the same market cap as Corel, in spite of the fact that they are losing money like crazy and also unlike Corel, have no established customer base, no established large-scale development organisation, no established large scale technical support organisation, and no distribution channel to speak of. These things matter! They are the things that distinguish a true going concern from one that has merely managed to get a huge IPO pop. The same is true of the others, even though their market caps are much larger. (Exercise for the reader: so which is really worth the most?)

Finally, whether it's to your tastes or not (I prefer Caldera, but that's beside the point) Corel has done a pretty good Linux distro - one which has achieved the significant accomplishment of taking Debian (which is technicaly excellent but had a well-deserved reputation for being a nightmare to install and configure) and making it quite easily usable by mere mortals. For a 1.0 release, I think the product is quite good - better than comparable first efforts from any of the other major distros.

Bash Corel if you want, but recognize that in the real world, where the rubber meets the road - Corel has things that the big market cap guys are still dreaming about. Little things, like paying and loyal customers, that some of us contrarians believe could be important over the long haul...

Corel's future.

[Matt2000]

As has been mentioned before, Corel has roughly 5 months of operating capital in the bank, and needed the merge most immediately to acquire Borland's cash reserves.

So here's the situation: Little money left, a ways to go before their Linux investment pays off (even longer without the merger), declining market share in core products like Draw, stagnant sales in Word Perfect office.

Did I miss anything? Maybe this will destroy the part of Corel's brain that contiually wants to compete with Microsoft in their core areas, and get them to focus on something that might make some money.

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