24/7 Wall St.

Corel Corporation (NASDAQ:CREL) has released earnings and Non-GAAP EPS $0.31 & Revenues in the third quarter were $60.4 million, compared to estimates of $0.30 & $61.1 million.  The company’s tax charges and other charges generated a loss on a GAAP basis.  Here is the GUIDANCE for next quarter, which is also the year end:

• Non-GAAP EPS $0.43 to $0.52 and Revenues of $66 to $70 million; consensus $0.54 EPS and $72 million revenues.

Unfortunately, soft top-line numbers in software companies rarely excite Wall Street; and weak revenues and earnings guidance ahead in software companies turn Wall Street the other way.  Graphics & Productivity products experienced double digit year over year growth for CorelDraw Graphics Suite, WinZip, Painter, Designer and iGrafx.  But that was then. 

This morning after reviewing the numbers it looked like this was so cheap that someone would see a "value stock" that looked cheap.  But in technology most stocks that appear to be "Value Stocks" end up being "Value Traps" that are exactly what they sound like.

The forward fiscal numbers still make the company sound cheap with $1.24 to $1.33 EPS & $244 to $248 million in revenues when you compare this to a $327 million market cap and $13.11 stock price.  But if it it is facing shortfalls over and over ahead, then this will be a stock that looks cheap and either stays cheap or gets even cheaper. 

This is a thin volume cult stock, but shares appear to have traded down about $4.5% in after-hours trading to $12.50; and the range is $11.90 to $14.51 over the last 52-weeks.  Its previous highs were up around $16.00 since coming back out as a public company in May 2006.  There might be some downgrades in the morning, barring anything not known. 

…..And to think Corel’s WordPerfect was once thought of as a "Office Suite" threat to a cardboard and plastic software company run by some guy named Bill Gates.

Jon C. Ogg
October 10, 2007