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Corel shares rise on unexpected profit

The embattled software company is back in the black two quarters ahead of schedule--an indication, it says, that its restucturing plan is working.

Embattled software company Corel, which has seen its fortunes go up and down more often than an elevator, will post a profit in its first quarter, two quarters ahead of the company's scheduled return to the black.

The company said Thursday that it expects to report net income of $500,000 on revenues of $32.5 million.

But that revenue figure is below internal expectations, officials noted. Shares were up 6 cents to $2.06 in morning trading.

Corel makes business and graphics software for various platforms.

Company officials did say they were unsure whether the shortfall will be deferred to later quarters when new product versions are released, and whether profit can continue in the second quarter.

"We are pleased with these early signs of success with our new strategic direction for the company," CEO Derek Burney said in a release. "While our revenues are lower than expected, our positive operating cash flow and earnings make it clear our hard work is paying off."

The company missed estimates for the fourth quarter, although it said it expected to see growth this year. It posted a net loss for that quarter of $8.6 million, or 12 cents per share, on sales of $40.4 million.

Only two analysts reported predictions for the first quarter, according to First Call, and they were expecting an average loss of 3 cents per share.

Corel has struggled since its proposed merger with Inprise fell apart last year. The company replaced flamboyant CEO Michael Cowpland with Burney in August, and got a helping hand from Microsoft in October, in the form of a $135 million cash infusion.

Corel announced a restructuring plan in January, saying it would focus on core products such as the WordPerfect Office desktop suite, the CorelDraw drawing program, and other future "creative" products, especially for the Apple Mac market.

In February, Chief Financial Officer John Blaine said that Corel expected to see a slight dip in revenues in the first quarter, with revenues for each quarter growing over the year-ago figures. Annual revenue growth is expected to be 18 percent to 20 percent, and the company hopes to boost sales 20 percent a year for the next three years.