Corel founder says 1998 should be profitable
KANATA, Ont. (CP) - Shareholders grilled Corel founder Michael Cowpland on Wednesday over the software giant's mounting losses and the timing of stock sales that benefited Cowpland and other senior executives before Corel shares plunged last fall.
One shareholder at Corel's annual meeting even suggested that Cowpland resign if the company doesn't turn a profit this fiscal year.
Cowpland tried to reassure stockholders that 1997 was a transition year and that the company would rebound in 1998 on the strength of Dragon, voice-activated computer software that impressed shareholders with its speed and easy use during the meeting.
Cowpland also has high hopes for a spiced up version of Java, a simple programming language that can be used over the Internet with a variety of other computer operating systems such as Windows.
"No doubt last year we experienced an erosion in confidence," Cowpland said. "We've bottomed out. We're kind of on a road to recovery."
As well, Cowpland predicted strong performances for the company's existing mainstay CorelDraw, and for WordPerfect and other products.
Corel lost $231.7 million US in 1997, the worst year yet for the graphics software giant as it tried to go head-to-head with its number one competitor, Microsoft.
The problems in 1997 have carried into 1998 with Corel announcing last month that its losses nearly doubled to $21.1 million US in the quarter ended Feb. 28.
Corel has taken it on the chin ever since it decided to take on Microsoft with its version of WordPerfect. It's first attempt at releasing Java sputtered while the company decided to upgrade the software.
And lawsuits against Corel are stacking up like pancakes at a Sunday brunch.
The latest is by 1930s screen star Hedy Lamarr. She's suing Corel for several million dollars for using her image without her consent. Another suit is pending involving a Canadian over the use of his image.
Corel is also facing three class action lawsuits in the United States brought by shareholders who allege Corel misled investors about its financial performance in 1997 while senior officers sold their holdings before Corel stock prices took a nosedive.
Cowpland sold $20.5 million worth of the company's stock - a quarter of his holdings in the company he founded 12 years ago - one month before the share price dropped 40 per cent on the unexpected news that Corel would post huge losses in its third and fourth quarters.
Cowpland said at the time he had no knowledge that trouble was on the horizon. He said he needed cash to cover personal debts.
He dismissed the suits Wednesday as the "cost of doing business. It doesn't really affect us that much."
The setbacks and the low value of Corel stock prompted some industry insiders to speculate Corel's misfortunes could leave it a target for a takeover. Cowpland said he was unaware of any takeover attempts.
In fact, he said Corel is on the verge of huge growth. He's betting that the emerging market for computers under $1,000 will be a bonanza because it could create a similar market for affordable software.
Corel has already knocked about 40 per cent off the price of some of its products to woo customers.
Cowpland also points to estimates that 100 million computers will be sold this year and he hopes Corel software will end up in many of them.
Stockholder Milan Stolarik said he expects Cowpland to produce.
"He made a commitment that the company is going to be profitable by the end of this fiscal year. I think he should be made to perform. I want to hold him to it."
At a later news conference, Cowpland appeared to back off from his promise to turn a profit.
"The goal is to be profitable," he said. "There is no such thing as guarantees."
In other business, Barbara McDougall, a former cabinet minister in the Brian Mulroney government, was appointed to Corel's seven-member board of directors. She joins former Ontario premier Bill Davis on the board.
Asked what she brings to the company, McDougall responded: "I spent 20 years in the investment banking business. I can add, subtract and read balance sheets."
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