Corel Q3 revenue holds steady, losses shrink
By Ian Karleff
TORONTO (Reuters) - Struggling software developer Corel Corp. said Wednesday that revenue held steady in its third quarter and losses were not as bad as feared because of across the board reductions in spending.
It also said a management restructuring will be announced by the end of the week and sales growth should return with the release of CorelDraw 10 for Windows software in November.
Corel lost $10.7 million, or 15 cents a share, in the quarter ended August 31, compared with a year-earlier profit of $17.6 million, or 26 cents a share.
Two analysts polled by First Call/Thomson Financial were expecting Corel to lose 28 cents a share in the quarter.
Revenues remained firm at $36.4 million, compared with $36.6 million in the second quarter, but are at half the level of the corresponding quarter of 1999.
``Costs are down, and our revenues are holding firm. Overall I am pleased to see the steps we're making,'' said Corel's interim chief executive, Derek Burney, in a conference call.
Sales in the quarter were down because of lackluster demand at the retail level, a traditionally slow summer season in Europe, and Corel's two flagship products reaching the end of their life cycle, Corel said.
Corel said losses from operations included $6.2 million of one-time charges, with $2.6 million of that in settlement charges, $2.5 million of employee severance charges and $1.1 million of asset write-offs and other restructuring charges.
``The third quarter represented a period of significant change at the company. With new leadership, new products and a disciplined financial program in place we believe we have the elements necessary to support long-term growth,'' Burney added.
Earlier this month Corel, with slumping sales and the resignation of its chief executive Michael Cowpland, announced it was slashing $40 million from its annual expenses.
Corel has been wrestling with declining sales for its older flagship products, including CorelDraw, while bringing new products to market based on the Linux computer operating system.
Earlier this month the struggling firm brokered a much-needed share offering for net proceeds of $56 million with an unnamed institutional investor. As part of the deal, Whale Securities Co. received a finder's fee of 226,000 warrants.
Corel's chief financial officer, John Blaine, said the share offering has yet to be finalized.
In the meantime the company is ``taking steps to supplement our cash reserves...we are constantly evaluating partnership opportunities that may provide additional cash,'' Blaine said.
Corel said that at the end of August it had $11.6 million of cash and cash equivalents on hand.
Duncan Stewart, a fund manager at Tera Capital Corp., said investors will not be looking at Corel's net losses, but instead at the company's ability to maintain revenues.
``We're looking for some sign that the revenue decreases have slowed. We're not expecting revenue to be up, but it would be nice if they weren't dropping by $3 million a quarter,'' he said.
Corel's shares closed down 10 Canadian cents at C$5.35 on the Toronto Stock Exchange, less than one tenth of their year high of C$64.55. On Nasdaq the shares closed down $1/32 at $3 19/32.
The company released results after the markets closed.
($1-$1.50 Canadian)
18:20 09-27-00 |
