Monday, January 07, 2008

Borland Stock: Did I Save You Money?

No sooner did I write a blog last week on January 3rd, 2008 about how I felt Borland (NASDAQ:BORL) was in a perilous position thanks to some really lame moves by their executive management team in 2007, than I read this CNN Money Article on January 4th about Borland workforce cutbacks in 2008.
"Borland to lay off 8% of workforce, close six sites, incur $8M-$10M charge...
There is a bit of coincidence here, but that is because it didn't take a Wall Street Analyst to see this stock, and company, essentially failing on many levels. Perhaps I prognosticated this, or more likely it was the result of actually looking into licensing volume, product prices, and financial results - see my original blog about Borland for details.

Maybe you read my blog in time and managed to sell before a further reduction in Borland stock value (new price today: $2.74/share; market cap: now just under $200 million). I have no idea what will become of this company (whose developer tools I really like for programming in Delphi especially!)

Here's the problem Borland (and many other firms need to take note also): YOU CAN'T CUT YOUR WAY TO PROFITS!

I also noticed this quote elsewhere on Computer Business Review:

Revenue for its last reported quarter (Q3) slumped 12% to $73m; though CodeGear only managed to pull in a paltry $12.5m.

OK Borland, that is just plain sad! ($50MM/year annualized) What are they doing? Oh, wait, I remember what they are doing, since I blogged about it already. They are essentially driving their otherwise loyal customer base away after instilling all sorts of FUD (Fear, Uncertainty, and Doubt) back when they announced the whole master-plan of spinning off developer tools as "CodeGear". How could anyone be surprised by this outcome?

Give me that company and all those tools and I guarantee I'll sell more than $50MM of developer products per year (yes, I have an EGO - LOL!) In all seriousness, I'd take on the job of running that company without a salary. I'd do it for purely stock options (and free Borland products for life), since I am quite certain I could restore some shareholder value, and I know I can use their development tools. :)

Heck, just 20,000 full Enterprise-Edition licenses of any of their major tools would bring that level of revenue in. Just doesn't sound like much, especially if they can land just some larger development shops.

Speaking of development shops... I still think there is a challenge with getting certain copyright-avoiding nations' developers / programming-firms to pay for legal copies of software - and yet we, the USA, keep outsourcing more work to such places and then wonder why we can't sell development tools anymore. If I was in charge of Borland, I'd move quickly to "lock those tools down" and employ novel methods for doing so. Sure, hackers can crack security on nearly anything these days, but you don't have to make it incredibly simple for them to do so! Certainly there has to be a solution that can prevent rampant violations.
[interesting side story: I had a Borland person scold me on a Borland newsgroup once for suggesting that a copy of Delphi 2006 Enterprise I saw advertised on Ebay for $99 buy-it-now (indicated as "CD ONLY, but will come with a software key guaranteed to work") was likely to be illegal, when the product had just been publicly released and would cost 20 times that to purchase from Borland. Legal: Yeah, right!] Needless to say, Borland needs to crack down on that kind of thing!
Back to the issue at hand... the state of Borland as a company. This latest data tells me that, most likely, a BUYER could have that whole "CodeGear" division for probably 200-500 million TOPS, and probably a lot less. Maybe if I just wait long enough, I can just buy it outright. ROTFL (that'd take some serious drop in price yet!)

In the mean time, here we developers go with more angst and anticipation (over Delphi and other Borland products!) And, as always, this FUD will lead to a further erosion of Borland's customer base. I can almost picture all the development-team meetings going on where plans are being discussed as to how to best minimize risks associated with Borland going under!

I'll try to remain optimistic and hope Borland soon gets a plan in place for projecting strength and longevity, and giving people a reason to buy their products (aside from just the technical merits of Delphi, JBuilder, 3rdRail, etc). But, I'm sure there is a rocky road ahead for the company, and the stock.

1 comment:

stocksshock said...
This comment has been removed by a blog administrator.