Apparently rumors are that CFO objected to MC's hyping. Not a good story. CORL in low 20's in after market trading. Gap-down open certain tomorrow.
December 15, 1999 19:07
FOCUS-Corel stock hit hard by resignation of CFO
(Recasts throughout, adds analysts' comments, closing stock price)
By Susan Taylor
OTTAWA, Dec 15 (Reuters) - Shares in Corel Corp. plunged nearly 24 percent on Wednesday after the high-flying software developer said its chief financial officer had resigned.
Analysts said the departure may signal a rift in the upper echelons of the Ottawa firm.
Corel shares were depressed for the entire day, but losses deepened after Corel Chief Executive Michael Cowpland said in a statement that he had "reluctantly" accepted the resignation of Michael O'Reilly, the chief financial officer.
"The implication here is that there is a disagreement at the highest levels of the company that has caused him to decide to leave," said Jean W. Orr, analyst at Bluestone Capital Partners in New York, who has followed Corel for nearly six years.
Orr, who spoke with O'Reilly during a recent visit to the company, said he gave no indication he was leaving.
Corel gave no reason for the resignation of O'Reilly, who will remain with the firm until a replacement is found and help prepare for the release of fourth-quarter results on January 18.
"I think he's left for personal reasons," Cowpland told Reuters, adding that O'Reilly's departure is amiable.
"Mike was a friend way back," Cowpland said, adding that the CFO first discussed his departure a few weeks ago and made a final decision on Wednesday.
Orr suggested a disagreement could stem from Corel's new Linux technology: how revenue is recognized or what public statements should be made on sales.
Corel released a desktop version of Linux, an open source operating system that is a contender to Microsoft Corp.'s Windows NT, on November 15. Shipping of the system did not begin until November 30 -- the same day the quarter closed.
"There may be some disagreement as to what revenue should be recognized or how much should be talked about publicly at this point, or what kind of numbers should be stated publicly," Orr speculated.
Cowpland denied that suggestion, pointing to O'Reilly remaining with the firm for the fourth-quarter results as an indication there was no discord.
O'Reilly, who replaced CFO Chuck Norris in late 1997, is acknowledged by analysts who follow Corel as bringing much-needed discipline to the company.
"Michael O'Reilly's departure to me is...nothing less than a disaster for the credibility of the company," said Duncan Stewart, fund manager at Tera Capital Corp. in Toronto.
"A tremendous part of the reason why I was willing to invest in Corel was because of Michael's presence."
The CFO introduced more conservative financial reporting and is credited with bringing expenses in line with revenue. He is also considered integral to the restructuring of Corel and its return to profitability in the fourth quarter of 1998.
O'Reilly, who joined Corel in 1997 after 21 years at accounting firm KPMG, where he was a senior tax partner, has not indicated his future plans.
"I'm definitely concerned because I think Mike has done some very needed and difficult things at the company," said Orr. "He's brought some voice of reason to a number of decisions."
Corel shares fell C$10.30 on the Toronto Stock Exchange to C$33.15, while on the Nasdaq the issue fell
6-7/16 to 22-11/16. |
