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Corel to cut 22 percent of work force

The software publisher says it's laying off 220 employees in a move it hopes will ultimately save it $12 million per year.

Corel on Wednesday said it is slashing its work force by 22 percent in an effort to weather the dismal economy.

The Ottawa-based software publisher said it will lay off 220 employees, a move that will cost the company between $5.8 million and $6.3 million in restructuring charges during the fourth quarter. Corel expects the cuts will ultimately save it $12 million per year.

"Today's actions are necessary for us to realize the company's ongoing strategy to build long-term value for our shareholders and continually improve the experiences of our customers," Corel CEO Derek Burney said in a statement.

Although the company has climbed back from the brink of extinction--recently usurping Microsoft's software on the low-end machines of computer giants such as Dell Computer, Gateway and Hewlett-Packard--analysts say Corel has been unable to translate the wins into a significant turnaround.

Analysts say that buyers of the inexpensive machines that come bundled with Corel's WordPerfect software aren't the type of customers who are likely to pay for upgrades.

The cuts come just six weeks after the company appointed a new interim chief financial officer to administer a new cost-cutting plan.

When announcing the job cuts Wednesday, Corel's Burney predicted that revenue will grow next year and called the company's approach "conservative."