2HRS2GO: Wall Street numb to Corel's ineptitude

If Corel wasn't the biggest laughingstock on Wall Street before Thursday's profit warning, it certainly is now.

Things have deteriorated so horribly that investors saw fit to only clip 5/32 from its stock price on news that would have sent any legitimate company's stock into at least a 20 percent decline.

Obviously, investors just don't take this company seriously anymore.

And why should they?

While compiling the accompanying links for this story, it was hard to keep from howling at the series of management missteps, profit warnings, layoffs, employee defections and flat-out failures this company has endured in the past three years.

I've heard rumors that at one time this company actually made decent software and consistently turned a profit. They say, believe it or not, that the stock used to appreciate.

But after watching this Laurel-and-Hardy act for the better part of three years, I can't believe a word of it.

Neither can its investors, those few who remain.

This latest bit of bad news elicited almost no reaction from Wall Street as the stock only lost 5/32 to 3 7/8.

Even CNBC reported the news as if it was a given, another warning from Corel. No elaboration.

How pathetic is a company that says its sales are going to be almost half of what they were in the year-ago quarter and all Wall Street can do is yawn?

On Thursday, Corel said its second-quarter sales would fall between $37 million to $38 million, way down from the $70.5 million it recorded in the year-ago quarter. It's expecting a loss from operations in the neighborhood of $24 million, not the $19 million it projected in late March.

"While revenue is less than originally expected, the company's expenses are also reduced from the first quarter levels," said CFO John Blaine in a prepared release. "The company is making progress toward its goal of realigning its cost structure."

Yeah, that's because it's in the process of canning 320 employees, all of whom undoubtedly are ruing the day they ever set foot in the place.

When Corel announced the layoffs last week, I asked an analyst, off the record, to give me one good reason investors should take another chance on the stock.

There was no response.

"But the stock's cheaper than a McDonald's value meal," I said. "What if someone tries to buy it or perhaps a merger? Surely, the cash value of the company is worth more than the stock."

Silence.

Last month, Corel caught a break when Canaccord Capital Corp. agreed to invest about $10 million with an option for an additional $20 million to help keep the software developer afloat.

One can only wonder what Canaccord Capital was thinking when they agreed to take on this white elephant.

At least the folks at Inprise (Nasdaq: INPR) came to their senses in time to nix a proposed merger with the Canadian software developer.

I picture the Inprise executives sitting around the conference room, ready to sign the deal, when some bagel delivery guy walks in and overhears the conversation.

"You guys are going to merge with Corel?," he asked incredulously. "You're crazy. Corel's a joke. They had one good piece of software back in the 80s and haven't done jack since."

The suits all looked around at one another, broke into uncontrolled laughter, and called Corel CEO Michael Cowpland to tell him they weren't interested.

Maybe it didn't happen that way but what's the difference?

In its latest quarter, Corel (surprise, surprise) missed analysts' estimates, losing $12.4 million, or 19 cents a share, on sales of $44.1 million.

First Call Corp. consensus was expecting a loss of 32 cents a share this quarter, but they'll have to revise those estimates higher, an exercise they've mastered by this point.

Even when Corel tries to do something positive, casting itself as a player in the "red-hot" Linux market, it falls apart at the seams.

Like a company with Corel's track record and management team, particularly Cowpland, could adapt and prosper in an emerging market that measures time in nanoseconds and, possibly, may never be used as a desktop operating system.

Give Corel another couple months and it will be trying to convince Wall Street that it's an up-and-coming player in the race to type the human genome.

Oh, that's right. There are already half a dozen companies light years ahead of Corel in that endeavor as well.

All of this is symptomatic of what's wrong at Corel. No leadership, no direction and no follow through.

I don't know why I care.

It's obvious that people are more interested in the frolicking of the CEO's wife than the company's execution or, rather, lack thereof.