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Corel draws increased profits

Bolstered by sales of its application suites and WordPerfect products, Corel reports a rise in revenues and profits.

Bolstered by sales of its application suites and WordPerfect products, Corel (COSFF) today reported a rise in first-quarter revenues and profits.

The Canadian software maker reported $1 million in net profits, or 1 cent a share, for the quarter ending February 28, compared with a loss of $6.6 million or 12 cents a share a year ago.

The report marked the second straight quarter Corel has posted earnings in the black, but it was much less than the $6.5 million in profits of the previous quarter. The results beat analysts' estimates of an operating loss of 1 cent per share, according to the First Call earnings service.

Revenues, meanwhile, reached $93.7 million for the quarter, compared with $36.4 million a year ago. Sales, which are traditionally slower in the first quarter, are down compared to fourth-quarter revenues of $125.4 million.

During the first quarter, more than half of the revenues, or $54 million, came from the company's productivity application suites, including the WordPerfect products that Corel purchased from Novell early last year. And $13 million in revenue came from a one-time license of the upcoming Office for Java to ECG Technologies.

Corel CEO Michael Cowpland, in a conference call to analysts and the press, gave more details about the company's plans to spin off a hardware division that is working on producing and distributing a network computer. The new arm will be called the Corel Computer Corporation and remain based in Ottawa, Canada.

The operations will be led by Eid Eid, Corel's current vice president of software development. Eid will be president and Cowpland will be chairman. The subsidiary will initially have a budget of about $2 million, Cowpland said.

The company, however, has not settled on a revenue model for the network computers, which will ship with videoconferencing capabilities. Corel hopes to sell minority stakes in the new company to investors and could go public within a year, Cowpland said. He declined to name any potential investors.

Meanwhile, a full beta of Office for Java will be posted on the company Web site next week. The final version is due in June. Corel also plans to ship new versions of its WordPerfect application suite later this quarter and in the third quarter.

Corel, which released its results after the market's close, saw its shares finish the day at 6-1/2, down 7/16 of a point. Corel stock has shown a steady decline and is down from a year-high of almost 14 last June.