Market shrugs off Corel's latest product launch
By Susan Taylor
OTTAWA, Aug 29 (Reuters) - Investors took little notice on Tuesday as embattled Corel Corp. launched the latest version of its flagship CorelDRAW graphics software with a minimum of fanfare.
Corel, struggling with anaemic sales and the recent resignation of chief executive Michael Cowpland, also said its CorelDRAW 10 Graphics Suite would carry some stiff price hikes when it hits store shelves in November.
There was little market reaction to a low-key press release from Corel about the launch, which took place at the Seybold technology trade show in San Francisco.
"Some of it is just concern about where the company is going now that Mike's not there, and this obviously isn't going to mean an immediate uptick in revenues or earnings," said Jean W. Orr, an analyst at Bluestone Capital Partners. "It's all bound together in terms of (the stock) not reacting."
Corel shares slipped 7 Canadian cents to end at C$4.91 on the Toronto Stock Exchange and gained 1/32 to close at $3-5/16 on Nasdaq.
"Tied in with the product launch is usually some media hype and advertising and things like that -- so in general the markets have in the past responded positively," said David Wright, analyst at BMO Nesbitt Burns.
Corel has dramatically scaled back such lavish launches. The company cut one-fifth of its work force in June to trim about $11 million from its annual budget, but needs further slashing to meet its target of $40 million in annual savings.
Sales from the new graphics product won't help the company in its third quarter, which closes on Thursday, but will factor into the firm's fourth-quarter revenues. "I currently rate it (Corel) an underperform, I think they're going to have a tough August quarter," Wright said.
Corel said it expects to post third-quarter results in line with its second quarter, when it announced sales of $36.6 million, a drop from $70.5 million in the year-earlier period.
The company said CorelDRAW's second quarter sales of $17.2 million were down from $26.7 million a year earlier and WordPerfect sales of $16.8 million slipped from $43.8 million.
CorelDRAW 10 has a suggested retail price of $249 for an upgrade version and $569 for a full version. In contrast, the suggested retail price for CorelDRAW 9 Graphics Suite upgrade version was $199 -- 25 percent cheaper -- and the full version was $695.00.
"This is the biggest upgrade we've ever done for Draw and we've added a whole new application," a Corel spokeswoman said, referring to a Web animation feature.
The cost of the full version has declined because Corel said it is trying to bring suggested retail prices in line with street prices. |
