Struggling Canadian software maker Corel today cut 320 jobs, or
21 percent of its workforce, as part of a $40 million cost-cutting
Corel, best known for its WordPerfect word processing software and its
recent foray into software based on the Linux operating system, has fallen
on hard times recently.
The company has suffered from two straight quarterly losses, its cash
reserves have dwindled, and its stock price has plummeted.
The cutbacks have been expected for several weeks, following a failed merger with software development
toolmaker Inprise, which would have given Corel a $240 million cash
infusion. Corel had warned the company could run out of money in July
if the merger failed or the company didn't secure more financing.
Corel in late May received a cash
infusion of $10 million to $20 million, but it was not enough to stave
off today's layoffs.
A Corel representative said today's layoffs are the first step in the
company's plan to slash $40 million from its annual budget. In addition,
Corel chief executive Michael Cowpland, who made $199,000 last year, today
decided to forego his salary.
Cowpland said the layoffs were not an easy decision to make. "They're
highly-skilled, motivated people whose energy and dedication have
contributed to the company's reputation for innovation over the years," he
said in a statement. "After much careful deliberation, the company
concluded that these steps were necessary."
Corel representatives said the job cuts affected all company departments
and included contractors and unfilled positions. Corel will have about
1,200 employees after the layoffs.
Analysts said further cuts may be necessary. "Part of the cost-cutting will
be the way they operate; part of the cost-cutting will be the number of
employees," David Wright,
technology analyst at BMO Nesbitt Burns, told The Associated Press. "It
there's still something else that has to happen...if they still believe
that $40 million is the magic number."
Corel predicts losses for the next two quarters as the company transitions
from its traditional word processing and graphics software to Linux
Corel shares have ridden a roller coaster over the past year. The stock
closed down 22 cents today at $5.03 on the Nasdaq exchange, on a volume of
4.7 million shares,
almost double its average daily volume of 2.5 million.
The stock has traded as high as $44.50 and as low as $2.81 over the past 52
weeks, and it has fallen about 67 percent since the beginning of the year.
Corel shares surged near the end of last year as investors speculated that
the company would be a takeover
The shares climbed further in
late November, even after the departure of highly regarded chief
financial officer Michael O'Reilly.
The initial public offering of VA Linux on December 9 sent
Corel shares to their record
high for the year, as investors greeted the Linux sector with wild
enthusiasm. The shares have since fallen off steeply.
The Associated Press contributed to this report.