Corel posts fourth quarter loss, sees improvement ahead
Corel Corp. (Nasdaq: CORL) reported a fourth quarter loss Friday and missed consensus estimates amid weak sales. On a conference call with analysts, officials 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 invites questions from prospective future shareholders at "asktheceo@corel.com."
Shares in the Canadian software company closed were off $0.18 to $2.75 Friday morning. The stock regained some ground last month after Corel unveiled a restructuring plan. Corel said Jan. 23 it will focus on its core products such as the WordPerfect Office desktop suite, the CorelDraw drawing program, and other future "creative" products, especially for the Apple Mac market.
On a conference call Friday, CFO John Blain also gave projections for 2001. With the exception of a slight decrease in the first quarter, revenues for each quarter are expected to show growth compared to the comparable quarters in 2000. Annual revenue growth is expected to be 18 percent to 20 percent. Under the company's new growth strategy, it had said it hoped to boost sales 20 percent a year for the next three years.
Blain 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 is also 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, Blain 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. First Call's consensus of two analysts was expecting 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 per 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 Q4 and year-end results demonstrate that our financially-disciplined approach is paying off," said Blaine 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 one-time Microsoft (Nasdaq: MSFT) rival has been troubled since its merger with Inprise (Nasdaq: INPR) failed in May. Flamboyant CEO Michael Cowpland stepped down in August and the company was propped up by a Microsoft $135 million cash infusion in October.
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