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Corel warns of further losses
By JILL VARDY
Technology Reporter The Financial Post
OTTAWA - Corel Corp. warned of a big loss in its fourth
quarter yesterday after confirming earlier warnings of a dismal
summer.
Corel's net loss of US$31.4 million in the quarter ended Aug.
31 will be followed by a loss of US$15 million to US$20 million
in the fourth, president and CEO Michael Cowpland told
analysts. The fourth-quarter loss will reflect revenue of US$70
million to US$75 million, but not cost cuts to be implemented next year.
Corel's third-quarter performance was just as bad as the
company warned it would be Sept. 9. It reported a net loss of
US$31.4 million (US47› a share) on revenue of US$55.8
million. In the third quarter of 1996, Corel lost US$3.2 million
(US5›) on sales of US$84.9 million.
Sales of WordPerfect software were about 40% lower than anticipated during the June-August
quarter.
Corel shares (COS/TSE, COSF/NASDAQ) have fallen more than 30% in the year, closing yesterday down 15› at $6.80 in Toronto. That's close to their 52-week low of $6.30. In the U.S., it closed down 3/64 at US$4 61/64. Cowpland said the company is shifting emphasis from the retail to the corporate market. He is
confident this, along with cost cuts, will get it back to a break-even position in 1998. However,
revenue will remain at about the same level as 1997.
It is restructuring its sales staff to reflect the "increased commitment to the corporate market." Don
Sylvest-er, a former executive at Dell Computer Canada Ltd., has been appointed new vice-president of sales.
Advertising spending will be halved from the current US$20 million a quarter. Engineering costs will fall as staff focus on core products.
In contrast to Cowpland's optimism, analysts and investors are not convinced Corel will grab a bigger share of the US$5-billion annual market for office productivity software - word processing,
spreadsheet and time management products that comprise the typical business's major software purchases. Corel's main rival in that market is giant Microsoft Corp., and analysts say Microsoft's Office
software continues to outsell Corel's WordPerfect Office by a huge margin. |
