For the next few days, I’m going to do a series on where Corel Corporation stands today and then I’ll offer a few suggestions on things I feel would benefit the company and their sales.
In the last week, Corel mailed their annual report to stockholders. I’m definitely no stock analyst, but I’ll go over a few of the relevant numbers. Revenue has steadily increased from 2004 through 2008. Their profits have also steadily increased. Keep in mind that the timeframe includes purchases of some other companies. That means more products to sell and therefore revenue should have increased. The percentage of profits with relation to revenue was a bit lower. So while the numbers were good, there was nothing spectacular. There also wasn’t a disaster.
Since Corel’s stock went public a couple of years ago, its value has dropped dratically. $100 worth of stock in May 2006 was worth around $27 (US) by November 2008. Since then it has dropped to less than half of that value and was even lower before a rally in the last week or so. Clearly the stock market isn’t putting a lot of value in Corel’s numbers.
Of course, we also have to consider the amount of stock that gets traded. 69% of the company is owned by Vector Capital. That means over 2/3 of the stock never gets traded. Another large chunk is owned by institutional investors who are in the company for the long run. All in all, a very small percentage is in play. This means a few trades can have a big effect on the price. That still doesn’t diminish the fact that the price has dropped so much in three years. Yes, I own a few shares, but it certainly isn’t going to affect the price at all if I were to sell it.
Digging a little deeper into the annual report reveals the products Corel feels are important to their success. No surprises on the list. The only Corel product I noticed was missing was Corel Ventura. Not a surprise to me that it wasn’t mentioned since Corel’s management hasn’t had the guts to say anything publically about it in the last five years.
In the section talking about potential threats, Corel listed Microsoft and Adobe as their biggest threats. I don’t think that should surprise anyone either. All companies list threats so nothing bad should be read into the fact that Corel has threats. If we think a little harder about this, do you feel Corel will convert users from Microsoft Office to WordPerfect Office? Also consider there are powerful options like OpenOffice that have no cost. I certainly don’t think WordPerfect is going to be making any gain in the percentage of overall users. Similarly I don’t think CorelDRAW is going to make any significant gains in market share with relation to Adobe Illustrator or Photoshop. If they follow some of the marketing strategies I’ll propose in the next few days, they might gain a few percentage points. I just don’t think that will come by convincing users to switch from Adobe’s products to Corel’s. Those gains will probably come by developing new markets.
After reading through the report, I didn’t see a lot of encouraging news. I also didn’t see anything that told me Corel wouldn’t be around for quite a while. I really feel like Corel has done a very poor job of marketing in recent years and I will lay out a few ideas I have for improvement. They may not follow my ideas. In fact, some of you may disagree too. Please feel free to leave comments with your thoughts. It would be great if we could come up with a killer marketing plan together.