Corel lays off 320 employees amid financial woes
The struggling Canadian software maker cuts 21 percent of its workforce as part of a $40 million cost-cutting measure.
Corel, best known for its WordPerfect word processing software and its recent foray into software based on the Linux operating system, has fallen on hard times recently.
The company has suffered from two straight quarterly losses, its cash reserves have dwindled, and its stock price has plummeted.
The cutbacks have been expected for several weeks, following a failed merger with software development toolmaker Inprise, which would have given Corel a $240 million cash infusion. Corel had warned the company could run out of money in July if the merger failed or the company didn't secure more financing.
Corel in late May received a cash infusion of $10 million to $20 million, but it was not enough to stave off today's layoffs.
A Corel representative said today's layoffs are the first step in the company's plan to slash $40 million from its annual budget. In addition, Corel chief executive Michael Cowpland, who made $199,000 last year, today decided to forego his salary.
Cowpland said the layoffs were not an easy decision to make. "They're highly-skilled, motivated people whose energy and dedication have contributed to the company's reputation for innovation over the years," he said in a statement. "After much careful deliberation, the company concluded that these steps were necessary."
Corel representatives said the job cuts affected all company departments and included contractors and unfilled positions. Corel will have about 1,200 employees after the layoffs.
Analysts said further cuts may be necessary. "Part of the cost-cutting will be the way they operate; part of the cost-cutting will be the number of employees," David Wright, technology analyst at BMO Nesbitt Burns, told The Associated Press. "It looks like there's still something else that has to happen...if they still believe that $40 million is the magic number."
Corel predicts losses for the next two quarters as the company transitions from its traditional word processing and graphics software to Linux products.
Corel shares have ridden a roller coaster over the past year. The stock closed down 22 cents today at $5.03 on the Nasdaq exchange, on a volume of 4.7 million shares, almost double its average daily volume of 2.5 million.
The stock has traded as high as $44.50 and as low as $2.81 over the past 52 weeks, and it has fallen about 67 percent since the beginning of the year.
Corel shares surged near the end of last year as investors speculated that the company would be a takeover target.
The shares climbed further in late November, even after the departure of highly regarded chief financial officer Michael O'Reilly.
The initial public offering of VA Linux on December 9 sent Corel shares to their record high for the year, as investors greeted the Linux sector with wild enthusiasm. The shares have since fallen off steeply.
The Associated Press contributed to this report.