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Corel posts fourth-quarter loss, sees improvement ahead

The troubled software maker reports a fourth-quarter loss and missed estimates amid weak sales.

    Troubled software maker Corel reported a fourth-quarter loss Friday and missed estimates amid weak sales. But during a conference call with analysts, executives said that aside from a slight dip in revenue in the first quarter, the company sees growth in 2001.

    CEO Derek Burney also said Corel plans to keep investors abreast of developments on a more timely basis and invited questions from prospective shareholders at asktheceo@corel.com.

    Corel stock has regained some ground in the past few weeks, after the company described a restructuring plan. Corel said it will focus on core products such as the WordPerfect office suite and the CorelDraw drawing program and other future "creative" products, especially for the Apple Mac market.

    John Blaine During Friday's conference call, CFO John Blaine also gave projections for 2001. With the exception of a slight decrease in the first quarter, revenue for each quarter is expected to show year-over-year growth. Annual revenue growth is expected to be 18 percent to 20 percent. Under the company's new growth strategy, Corel had said it hoped to boost sales 20 percent a year for the next three years.

    Blaine also broke down projections by business divisions. The company's business applications division is expected to show growth over last year's numbers on a quarter-by-quarter basis and grow 15 percent to 20 percent for the full year. Its creative products division also is expected to show growth over 2000's numbers on a quarter-by-quarter basis.

    The company is also on target to reduce expenses by $40 million a year, Blaine said.

    Revenue for the fourth quarter was $40.4 million, below First Call's estimate of $45 million but better than the $36.36 million reported in the third quarter. The company attributed the increase to early sales of its CorelDRAW 10 Graphics Suite, which hit store shelves just a few weeks before the end of the fiscal year.

    Corel reported a net loss of $8.6 million, or 12 cents per share, fully diluted. The two analysts polled by First Call expected a profit of a penny a share. Corel officials said last month the company should be profitable by September.

    In last year's fourth quarter, the company had reported a profit of $4.5 million, or 8 cents a share. For fiscal 2000, revenue was $157.5 million, producing a net loss of $55.3 million, or 80 cents a share. That's down from revenue of $243.1 million a year ago and net profit of $16.7 million, or 26 cents a share. Cash and cash equivalents at the end of fiscal 2000 stood at $128.6 million.

    "Our (fourth-quarter) and year-end results demonstrate that our financially disciplined approach is paying off," Blaine said in a release. The company said it has strengthened its balance sheet, eliminated all its long-term debt and achieved the goals set out in its cost-restructuring plan by reducing spending by $10 million per quarter.

    The company has been troubled since its merger with Inprise failed last May. Flamboyant CEO Michael Cowpland stepped down in August, and the company was propped up by Microsoft's $135 million investment in October.