Consumer software developer Corel
In the fiscal fourth quarter, Corel's sales increased 4% to $47.4 million and net income increased from a loss of $3.4 million, or $0.17 per share, to a gain of $9.4 million, or $0.37 per share.
WordPerfect -- first developed in 1982 -- and CorelDraw faces fierce competition from the likes of Microsoft
Nonetheless, Corel has an extensive distribution platform, including 40 million customers across 75 countries, and major reseller deals with companies like Dell
But the key deal is its purchase of InterVideo, which develops multimedia software for DVD production, online video, and photo sharing. The $198.6 million buyout represents about 57% of Corel's market cap.
Corel should be positioned nicely to capitalize on the growth in online video, since InterVideo's tools allow users to process high-definition video and make Blu-ray discs. The company also has a strong presence in China, Taiwan, and Japan.
Corel's revenues may also revive with the launch of the Windows Vista operating system, since new versionf of Windows generally lead to an increase in upgrades. But again, this is unlikely to have an impact until the second half of 2007.
Corel is definitely making critical strategic changes. Once the InterVideo deal is complete, more than half of its revenues will come from digital imaging, a proportion that should continue to grow for some time.
However, for the next six months, there are no foreseeable catalysts for the stock, as the company focuses on integrating its new purchase. In other words, interested investors don't need to rush to buy in.
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