Inprise closed up slightly to 13 1/4 and Corel slipped just below 20. Corel shares are trading at less than half their 52-week high of 44 1/2. Inprise is off of a high of 20, but well above its low of 1 5/8.
By now we're all familiar with Linux euphoria. Red Hat and the recently engaged VA Linux and Andover.net have all been hot stocks. Linux is the open source operating system that runs many of the big Web sites out there. It's a stable platform and could give Microsoft fits.
Following that logic, the combination of Corel, which is becoming a major Linux player, and Inprise, which offers development tools for the Linux world and other platforms, should have been great news to investors.
But there's that lingering question: Does one company with a poor track record combined with another company with a poor track record equal a powerhouse?
No. Corel and Inprise officials painted this merger of equals as the combination for the future. The combined company would have all the products to migrate customers from Windows to Linux. We'll give them that assessment, but we're not convinced the new Corel can deliver. Past performance may not ensure future results, but it's nice to know what you're getting into.
Corel has hopped on so-many technology bandwagons it's silly. And Linux is just the latest. Inprise lost its focus and has been mired in management turnover, restructuring and disappointing results.
Inprise last month reported a fourth quarter operating loss of a nickel a share on sales of $45.5m (£27.4m). Including charges, the company lost $37.8m, or 64 cents a share. Sales were down from a year ago too.
Corel raised the expectations bar and then couldn't deliver. Through it all, Corel beat the Linux drum to juice shares.
The Linux theme continued on a media conference call. Corel CEO Michael Cowpland reiterated that Corel's Linux revenue was $3m in the fourth quarter, more than half of Red Hat's December quarter sales. And, Cowpland boasted, Corel Linux was only on the market a few weeks. Cowpland then went on to say Linux would bring in about $20m in sales for 2000 and then just two breaths later upped the estimate to $30m.
The guidance is typical of Cowpland -- overpromise and underdeliver. "That's the problem with Corel," said Bill Schaff, fund manager for the Berger Information Technology Fund. "Corel moved on Linux not because it is a well-run company."
Contrast Cowpland's guidance with Inprise CEO Dale Fuller, who said "we do not break out revenue by OS."
Cowpland will remain CEO and Fuller gets the chairman chair. We think the company would have been better off with Cowpland in the role of silent chairman. Fuller -- who used to be the CEO of WhoWhere? before selling it to Lycos -- has largely turned Inprise around and should have the company reporting a profit in the third quarter of 2000.
Put simply, Fuller seems like the better day-to-day guy. Fuller said it was too early for big predictions about the Linux market, but he was confident about growth prospects.
The assets of the combined company are in place for Corel to be a major player. And the Linux movement is legit -- IBM and other big players are making Linux moves.
The new Corel will have key Linux products and Inprise's coveted development team. Schaff said he was surprised Inprise sold out without a premium considering the company's development talent. "Inprise has a team of great developers," said Schaff. "But Inprise didn't know how to make a profit. If Corel can corral those high-priced engineers they could be on to something."
Corel could be a superstar in the Linux world. Now all it has to do now is execute, meet it quarterly targets and do the basic blocking and tackling. That's something neither Corel nor Inprise have been able to consistently do in the past.
New Corel, same old ifs.
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