COREL DRAWS MORE RED INK
BUT ANALYSTS, EXECS SEE BETTER DAYS AHEAD
By STUART McCARTHY -- Business Editor
ÿ COREL Corp. continued to bleed red ink in its latest quarter but even the analysts say things are starting to look up for the software giant.
ÿDespite posting a $21.1 million US loss on $45.5 million US in sales for the first quarter of fiscal 1998, the money finally seems to be on Corel climbing back into the black for the second quarter.
ÿYesterday's losses follow on the heels of 1997's disastrous $231.7 million loss on sales of $260 million.
ÿSales were also about half of the $80 million Corel had in the first quarter of 1997.
ÿBut those sales were later cut considerably as Corel ate hundreds of millions of dollars in product that had been stuffed into distribution channels.
ÿCorel now only reports end-user sales and reports all figures in US dollars.
ÿ"I am satisfied we are on a stable course," said Corel chief financial officer Michael O'Reilly yesterday.
ÿOf the $45 million, about 60% came from graphics software such as CorelDRAW 8 and the balance from productivity software such as WordPerfect 8.
ÿSenior sales vice-president Don Sylvester said that Corel actually sold $80 million in product out of distribution channels to the store and reseller level.
ÿExecutives indicated they anticipate reporting sales of $70 to $80 million at the end of the second quarter, which would return Corel to profitability.
ÿ"We're not going to do a line item projection," said O'Reilly. "But you would be in the neighborhood."
ÿSylvester said there has been strong acceptance of Corel's recent slashing of prices on software to play into the sub-$1,000 computer market. A new version of WordPerfect 8 with speech recognition built in will be released shortly.
ÿ"We estimate over 100 million PCs will be shipped with 35% installed with Microsoft Office," said President and CEO Michael Cowpland. "We believe we'll be able to attract about 55% of the market."
ÿWith the recent price cuts, Cowpland said Corel "could get a good surge in volume."
ÿCowpland also said he expected big things from Corel's coming Java offerings, two of which were unveiled this week.
ÿOpen*J, formerly code-named Alta, is a development tool which lets users create Java-based applications with very little training.
ÿAnother product called jBridge, formerly Remagen, lets users of any 32-bit applications such as network versions of WordPerfect 8 or Microsoft Office, use those programs on any type of computer running a Java interface.
ÿCorel will unveil jSuite this summer, which is a collection of lightweight applications including word processing, spreadsheets, graphics and workflow applications such as human resource forms, order and inventory forms and more.
ÿThat will also coincide with the commercial shipping of Corel's Video Network Computer, which was delayed because of "some minor problems with one of the chips" that Cowpland said is now fixed.
ÿWith the price of desktop computers falling, Cowpland said the NC price point will also drop to the $400 to $500 range.
ÿHe said Corel has not included any revenue from Java products in the current year's business plan.
ÿ"If you look forward, 50% of our activity could be Java in three years," Cowpland said.
ÿTerra Capital analyst Duncan Stewart said that despite another quarter of losses, "this one's a little different.
ÿ"I'm more positive and I've changed it to a speculative buy," Stewart said of his recommendation.
ÿ"If everything we've been told here can be delivered and I believe Michael O'Reilly will deliver -- he's a straight shooter -- I've got a target of about $5 US over the next 12 months," said Stewart.
ÿShares closed down 5› on the TSE to $2.95 Cdn.
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